Zambia power firm CEC, Old Mutual in talks over $205 mln project

LUSAKA, June 4 (Reuters) - Zambia's Copperbelt Energy Corp. (CEC) and Old Mutual (Other OTC: ODMTY - news) said they are in talks over a possible investment by the financial services group in a $205 million power station in Africa's No. 2 copper producer.

CEC, the largest supplier of power to mines in the southern African nation, would sell electricity from the hydropower plant expected to start generating electricity in 2018 to its existing clients as well as new customers in neighbouring states.

"We have been contacting many partners including Old Mutual with whom we are in talks right now," Humphrey Mulela, the managing director of the 40-megawatt Kabompo Hydropwer project in north-western Zambia, said on Thursday.

"The total financing required for the project is $205 million, of which $61 million is equity and the rest is debt."

CEC has spent $31 million on the project so far, including a road to the site and excavation works, he said.

"If we do the financial closure as planned this year, the power station should start contributing to national power supply by 2018," Mulela said.

Sean Friend, portfolio manager for the IDEAS Managed Fund (Infrastructural, Developmental and Environmental Assets Managed Fund), said in a statement that Old Mutual was involved in a number of power generation projects across Africa.

"Old Mutual is in preliminary discussions with Zambia's Copperbelt Energy Corp on a potential investment stake in one of the country's hydropower projects," he said.

Zambia's power generation capacity stands at 2,200 megawatts, with the bulk of the electricity produced from hydropower, but supply is often erratic. Zambia output fell to 1,900 megawatts in March due to low water levels in dams. (Reporting by Chris Mfula in Lusaka and Mfuneko Toyana in Johannesburg; Editing by James Macharia)