330 kV Project (KKIP) – enpower DRC

Kalumbila-Kolwezi 330 kV Interconnector Project (KKIP)

A pioneering interconnector project linking NW Zambia
to the main DRC copper mining cluster

Background and description of the project

The Kalumbila-Kolwezi 330kV Interconnection Project (KKIP) involves the design, financing, construction and operation of a high-voltage line linking the Republic of Zambia and the Democratic Republic of Congo.

KKIP is a private project developed by EPDRC and its subsidiary Enterprise Power Zambia Ltd.

The project involves linking Kolwezi, the capital of the Congolese province of Lualaba, to the ZESCO substation located on the First Quantum Sentinel mine property in the town of Kalumbila, in the North-Western province of Zambia. The 330 kV high-voltage line will be approximately 190 km long, two-thirds of which will be on Zambian territory, and is designed for a thermal limit of 700 MW of electrical power. The estimated total project cost is around USD 250 million.

Enpower has reached the following milestones:

The feasibility and detailed design studies have been finalised and validated in both countries
The environmental and social impact assessment has been finalised, validated and approved in the DRC and Zambia
Conclusion of a partnership agreement with ZESCO through a memorandum of understanding and a letter of support
Conclusion of an electricity supply contract with ZESCO and signing of an Power Supply Agreement for 350 MW
The building permit issued by the Zambia Energy Regulatory Commission
Concession/implementation agreements signed in the DRC and Zambia by the respective energy ministries
Electricity import licence obtained in the DRC.

Rationale

The Katanga region of the DRC is a prolific copper and cobalt deposit and a fast-developing mining hub;
Copper and cobalt are essential raw materials for the global transition to renewable and clean energy;
Mining companies have invested heavily to increase their production and processing capacity;
Energy demand is rising rapidly;
Despite its significant hydrological potential, existing and planned electricity generation in the DRC cannot currently meet the growing demand for electricity;
The current shortfall of 1,000 MW is expected to rise to more than 2,000 MW by 2030;
The miners have to resort to generating power through thermal diesel, which is costly and polluting, to compensate for the loss of income;
Over the past decade, Zambia’s national electricity company ZESCO has invested in large-scale hydroelectric generation (360 MW Kariba North Bank Power Station extension, 750 MW Kafue Gorge Lower Power Station, etc.) and boasts a structural electricity surplus despite seasonal variations;
There is only one interconnection between Zambia and the DRC, which is already saturated;
This is why EPDRC is developing a new interconnector, the KKIP, with the aim of exporting electricity from Zambia to meet mining demand in Katanga/DRC ;

Advantages of KKIP

strengthen the Democratic Republic of Congo’s interconnection with the SAPP (Southern African Power Pool) network by providing a corridor and additional transfer capacity;
offer the possibility of substantial additional supply for the transit of energy in both directions and provide an additional facility for the electricity market in the region;
serve as a direct energy supply route for mining companies operating in Lualaba province, in the Kolwezi hinterland, and thus offer the possibility of replacing costly, carbon-intensive captive generation with a secure supply of imported electricity;
Promote the development of the region through its many spin-offs, both during the construction and operation phases, benefiting the local population and industry as well as the extraction of raw materials from the subsoil;
provide open access to all qualified SAPP players;
comply with the environmental and social standards of the World Bank Group;

Milestones

Enpower DRC SARL launched the technical feasibility and environmental impact studies in 2020 in the DRC and Zambia and has already completed all the technical and environmental studies for the project.

Enpower has effectively reached the following milestones:

The feasibility and detailed design studies have been finalised and validated in both countries
The environmental and social impact assessment has been finalised, validated and approved in the DRC and Zambia
Conclusion of a partnership agreement with ZESCO through a memorandum of understanding and a letter of support
Conclusion of an electricity supply contract with ZESCO and initialling of an electricity supply agreement for 350 MW
The building permit issued by the Zambia Energy Regulatory Commission
Concession/implementation agreements signed in the DRC and Zambia by the respective energy ministries
Electricity import licence obtained in the DRC.

Financing

The KKIP project, estimated to cost around USD 250 million, will be financed through project finance with the support of development banks (DFI) for the bank loans and investment funds such as AIIM and STOA for the equity in a 70/30 ratio.

Enpower has signed a collaboration agreement with the International Finance Corporation (IFC) of the World Bank Group, which mainly consists of support for the banking structuring of the project. The IFC has commissioned technical, legal and environmental experts to carry out advanced due diligence in order to accelerate the financing of the project. IFC is expected to act as lead advisor to the mandate and lead lender to the project.

The KKIP project uses the following external resources:

Financial model: F1F9 (United Kingdom)
Engineering: ADC Projects (South Africa)
Technical collaboration: ZESCO (Zambia) and SNEL (DRC)
ESIA & RCAP: Geoquest (Zambia) / EOC (DRC) / SLR Africa (South Africa)
Legal (Concession): Mayer Brown (Paris, France)
Legal (PPA): Hogan Lovells (London, United Kingdom)
Legal (Structuring) : Norton Rose Fulbright (London, UK)
Tax: Ernst &Young (Zambia)