Zambia’s Power Utility Seeks Solution to $80M Payment Error in China Debt Talks
Zambia is working to address an $80 million payment mistakenly transferred by its state power utility, ZESCO, to China while finalizing its long-standing debt restructuring deal with the nation, according to Treasury Secretary Felix Nkulukusa.
The funds, accumulated in a securitized account from electricity sales tied to a power plant built and financed by Chinese companies, were “unfortunately” transferred, Nkulukusa explained in an interview on Sunday in Lusaka.
This payment issue underscores the complexities of Zambia’s debt restructuring process, which began in 2020 when it became the first African nation to default during the pandemic.
While Zambia reached a memorandum of understanding (MoU) with its official creditor committee co-chaired by China and France in October 2023, the final agreement with China has yet to be signed. Only upon the completion of this agreement can payments resume.
The incident also highlights the challenges posed by securitized or escrow accounts often tied to project loans, which can lack transparency.
The Zambian government has proposed that the $80 million payment be counted as an advance on interest accrued on its debt to China since 2023. “That is the discussion we have. We’re looking for a solution to that,” Nkulukusa stated.
The misstep serves as a reminder of the intricate financial arrangements that accompany major infrastructure projects and loans.
Zambia’s efforts to address this issue come as it seeks to navigate a delicate balance in its relations with creditors while striving to stabilize its economy.
ZESCO has yet to comment on the matter, according to Bloomberg News.
SOURCE:zambianmonitor.com
