Zambia’s CEC could take on more debt to buy Nigeria’s power unit

Zambia’s distributor of power to the mines, Copperbelt Energy Corporation (CEC), could take on more debt for the purchase of Nigeria’s state power company units that are scheduled for privatisation. Nigeria has split Power Holding Company’s distribution into 11 different units valued at about $100 million each and consortia that CEC is in have been short-listed to buy at least two of them, a senior official told Reuters on the sidelines of an investor conference in Johannesburg.

Nigeria plans a multi-billion dollar privatisation of its power sector to improve efficiency and cut persistent electricity outages. “We still have some leverage on our balance sheet. We can raise some money through the balance sheet and then we can do a rights issue depending on how good the deal is,” said Mutale Mukuka, CEC’s director of corporate finance. The first call is the balance sheet and thereafter if we need more we can leverage it through bringing in more equity in the business.”

Mukuka said that CEO also expects electricity demand to exceed the pre-crisis level of 540 megawatts in at least 18 months as new mines come on stream and existing operations expand. Africa’s top copper producer expects at least two new mining operations to begin in coming months: Brazilian VALE’s Konkola North mine and the Muliashi mine owned by China Nonferrous Metals Co Ltd.

“With all these projects coming onstream and taking up power definitely that will call for additional load,” Mukuka told Reuters. Each of the existing operations are also trying to maximize copper production and take advantage of the price.” Zambia has vast high-grade reserves of the metal and expects output to more than double to around 2.0 million tonnes by 2015. Copperbelt’s shares are up nearly 14 percent so far this year.