Nava Bharat (Singapore), wholly-owned subsidiary of Nava Bharat Ventures Ltd, has announced financial closure for the fully integrated coal and power project of its subsidiary, Maamba Collieries Limited in Zambia.
The 300-megawatt coal-fired power project, fully integrated with captive coal mining, is estimated to cost about US$828 million. The project has achieved 80 percent completion.
The project is unique in Zambia as it provides a dependable and sustainable base load power source, which is crucial to the country’s energy security and provides Maamba Collieries Limited with ready infrastructure to scale up in line with the growing demand for power not only in Zambia but in the entire Sub-Saharan region. This project has resulted in economic empowerment and growth in the under-developed Southern Province of Zambia.
“We are excited to be a part of this project in Zambia and this is a significant win for us as a Singapore-based company making inroads into Africa,” said Mr Ashwin Devineni, Managing Director, Nava Bharat (Singapore).
“There is so much potential in the region and with our extensive experience and expertise in managing projects in the power, mining and agri-business sectors over Asia and Africa, we are confident that the integrated project will have a positive impact on Zambia as well as its neighbouring countries. The infrastructure being created under the ambit of present project affords it easy scalability in tune with growing demand for power in this region,” Mr Devineni said.
The project is being funded on a debt equity ratio of 70:30. Nava Bharat (Singapore) and ZCCM Investments Holdings Plc (representing the Government of Republic of Zambia) hold 65 percent and 35 percent equity stakes in Maamba Collieries Limited respectively.
The long-term loans are being advanced by a consortium of lenders comprising development financial institutions and large international commercial banks on a limited recourse project finance basis. Development financial institutions include Development Bank of Southern Africa and Industrial Development Corporation of South Africa while commercial banks include Bank of China, Industrial and Commercial Bank of China, Standard Chartered Bank and Absa Bank Limited. This is the first private power project in the Sub-Saharan region to receive export credit agency insurance cover from China Export and Credit Insurance Corporation (Sinosure). This combination makes it a unique and collaborative project in Africa, where the sponsors are from Singapore and Zambia, principal contractors are from China and is funded by financial institutions across the globe.
“Nava Bharat Ventures has been focusing on power business for the last two decades. The Zambian project investment is a right fit in our growth trajectory from synergy and integrated project perspectives. We are heartened by the participation of lenders across Africa and China, which truly vindicates our conviction in the techno-economic feasibility of the project,” Mr GRK Prasad, Executive Director, Nava Bharat Ventures said. “We remain committed to the highest standards of corporate governance for sustainable business that aims at generating long term value to all our shareholders and we will ensure that our operations benefit the local communities while having minimal impact on the environment,” he added.
Zambia is currently facing a power deficit of 560 megawatts and the imminent completion of the project would aid in bridging the current shortfall, while its prime location will help to facilitate export of power throughout the Southern African Power Pool, a cooperation of the national electricity companies in Southern Africa with a common power grid between their countries and a common market for electricity. This is critical as the demand for electricity is predicted to double by 2030 in the region. Sale of high grade coal by Maamba Collieries Limited to local major industries in Zambia including copper smelters, cement, breweries, steel as well as export to neighbouring countries, will provide an upside to the company.
“The project will help in widening the potential for power generation sources to meet the growing demand in Southern African region including Zambia. This project has therefore received the full support of the Government of Republic of Zambia since inception,” said Mr Venkat Shankar, CEO, Maamba Collieries Limited. “Reports show that Africa’s economy is expected to expand by 50 percent over the next five years and demand for power will also grow correspondingly. We are hopeful that this project will contribute to the needs of Zambia and the region,” he added.
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