The Challenges Faced by Private Project Developers in Securing Financing for Hydropower Projects in Zambia
The study investigated the challenges faced by private
project developers in securing financing for hydropower projects in Zambia. It was
a cross sectional exploratory study based on the pragmatic research philosophy.
The multiple case study research strategy was utilized in the study. Mixed methods
were selected as research choice and non-probabilistic was used as the sampling
technique. Primary data was collected through semi-structured interviews and secondary
data was obtained from library and internet. The population of the study comprised
13 hydropower projects that were being promoted by the Office for Promoting Private
Five of Thirteen (38.5%) hydropower projects were considered
for the study having relevant data for the study. Purposive sampling was used to
select the projects. Quantitative and qualitative data was collected and analysed.
The study found that the challenges in securing financing for hydropower
projects in Zambia were related to the non-fulfillment of the key conditions required
for nonrecourse financing of hydropower projects. Those conditions were
Development Mode of the project
Sharing of project unlimited
Government guarantees for
project credit enhancement
The Level of electricity
The Power off-taker for the
Provision of escrow arrangements
by the off-taker.
The study concluded that the efforts made by Government to support private
investment in hydropower projects did not directly address the risks associated
with project finance mobilisation. It was therefore recommended that Government
addresses these requirements from the lenders and developers in line with the principles
of project finance to enable the hydropower projects secure financing in Zambia.
Keywords: Project Mode, Unlimited
Risks, Government Guarantee, Electricity Tariffs, Off-Taker, Escrow, Project Financing.
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