Project Profile Project Title: BatokaGorgeHydroPowerProject Project Reference Nr Project Length / Capacity Country(s) National Context

1600megawatts(MW) Zambia and Zimbabwe Zambias hydropower resource potential stands at an estimated 6,000 Mega Watts (MW) while the installed capacity is around 1900MW. Hydroelectric plants represent 99 percent of electricity production in Zambia with the major sources being Kafue Gorge, Kariba North Bank and Victoria Falls Power Stations. Zambias electricity is predominately consumed by the mines. In Zambia, a number of hydropower projects are being currently developed such as Kafue Gorge lower (750 MW), Kariba North Extension (360 MW) and Itezhi-Tezhi (120) in order to meet the growing national and regional demand. Zimbabwe is facing energy demand and supply gap which is rapidly increasing due to increased consumption in all sectors of the economy, in particular, mining and industrial sectors. It is, Therefore, vital that a reliable and uninterrupted supply of energy be secured. Zimbabwe energy industry is among the fastest growing energy industries in Africa. In recent years, Zimbabwes electricity generation sector has been liberalized and new players have been granted the green-light to establish independent power stations to bridge the huge power gap that the country is experiencing.

Regional Context

The power deficits that eastern and southern Africa region has experienced in the last few years should be seen as an opportunity for power generation investors. Development of power generation and interconnection projects should, therefore, be accelerated for the benefit of the countries of eastern and southern Africa. The project should engender a spirit of increased cooperation among and between utilities in the two countries region at large. Thus, encouraging more power trading among utilities of the region, especially given the differing seasons and time zones, in terms of peak and off-peak periods. .

Construction & Maintenance History Economic Activity on the Project (incl estimated traffic volumes for roads)

N/A

Project Objectives

It is expected that this project would play a critical role in reducing the cost of doing business and enhance the competitiveness of enterprises. Moreover, as the regions economy and trade continue to grow. It is therefore, expected that these type of projects will be critical element in supporting social and economic activities such as industries, investment, tourism, etc., and also fundamental in supporting and sustaining the achieved economic growth. . To increase generation capacity and reduce power outages. Once completed the Batoka Hydro scheme will leave Zambia and Zimbabwe a net exporter of power in the region. The project will also improve the generation mix which is currently skewed in favour of fossil fired plants. Execution of the project will significantly increase base load. Power exports to the region will boost inflows of the much needed foreign currency. The project will also stimulate other downstream economic activities.

Expected Results

Project Scope & Core Activities

The project involves the construction of a dam and a hydro power plant on the Zambezi River. The potential capacity of the site is 1 600 MW to be shared equally between Zambia and Zimbabwe. Construction of two underground power caverns (one North and one South), installed capacity of 1650 MW (2X 800MW). Generation efficiency would be 86%. Construction of other Infrastructure such as transmission lines, access roads and housing plus social amenities. This entails that a Project Management Unit be established in order to facilitate the coordination. The project is available for investment and has no takers at the moment. The detailed feasibility studies, which were completed in 1993, indicated that it is economically and technically feasible to construct 4 x 200 MW units on the Zimbabwe side & 4 on the Zambian side. However, the feasibility studies will need reviewing. A comprehensive EIA and SIA carried out (1993 &1998).

Current Project Status

The feasibility studies will need reviewing. Project presented to financiers such as ADB who have expressed an interest to finance the next phase of final engineering designs with Tender Documents. Zambia and Zimbabwe took an important step to signing a Memorandum of Understanding (MOU) on cooperation to jointly construct a 1650 megawatts hydropower station at Batoka Gorge. With the ZESA and ZESCO Power Station extensions at Kariba, the Batoka Project becomes more critical for the conjunctive operation of the two dams which increases firm capacity at Kariba. The risk is the project may not be able to attract sufficient concessionary financing to enable it to be implemented. Ministries of Energy, power utilities and power regulators in the two countries are the major stakeholders. However, ICT service providers are also envisaged to be stakeholders, in particular these activities related to communications.

Political & Governance Context (Budget, Exposure, National Strategy, Legal Framework, Risks, Assumptions)

Stakeholders

Estimated Cost for Preparation Estimated Date of Completion of Preparation (until PIM) Funding Status of Preparation Estimated Cost of Construction & Supervision Estimated Completion of Construction & Supervision Funding Status of Construction & Supervision Financing Model

Two years

Project presented to financiers such as ADB who have expressed an interest to finance the next phase of final engineering designs with Tender Documents. Total project estimated cost is over US$ 4 billion. The project estimated costs as at 2009 was US$ 2.8 billion 7 to 8 years from financial closure.

The two countries to jointly approach financiers and also the regional economic communities as well Credit loan Build, Own, Operate and Transfer BOOT) Public Private Partnerships (PPP)

Revenues for Repayment of Financing Project Contacts Documentation Available

Revenues for repayment of financing shall come from the sales of electricity. b