KGL Power Development Corporation Launches Strategic Plan to Transform Zambia’s Energy Sector
Amid ongoing power shortages exceeding 1,300MW, which have led to severe blackouts across Zambia, Kafue Gorge Lower Power Development Corporation Limited (KGL), a subsidiary of Zesco Limited, has launched an ambitious 10-year strategic plan aimed at reshaping the country’s energy landscape.
The plan, unveiled on 11 December 2024, seeks to tackle the power crisis while promoting sustainable green energy and supporting Zambia’s broader economic goals.
KGL’s transition from a project-driven entity to a fully operational power generation corporation marks a significant shift in its operations. The corporation operates a 750MW hydro-power plant, which currently holds the highest installed capacity among Zambia’s independent power producers.
Eng. Wesley Lwiindi, speaking on behalf of Acting Board Chair Eng. Justin Loongo, highlighted the core philosophy embedded in the plan: “KGL does not only anticipate the future, it shapes it.”
Lwiindi emphasized KGL’s commitment to providing safe, sustainable, and efficient energy, aligning with Zambia’s Vision 2030 to become a lower-middle-income country.
A key element of the strategic plan is KGL’s commitment to diversifying energy generation, with plans for a 200MW solar photovoltaic plant by 2030. This diversification aims to reduce reliance on hydro-power and mitigate risks associated with concentrated revenue streams.
Additionally, the introduction of open access regulation will provide opportunities for power sales beyond current agreements with the state utility, further enhancing KGL’s financial sustainability.
The estimated cost of implementing the 10-year strategic plan is USD 2.44 billion, with approximately two-thirds allocated to debt service. Despite facing significant debt challenges, including government-guaranteed external debt exceeding USD 900 million, KGL is optimistic about its financial outlook.
The company projects a substantial improvement in its debt service coverage ratio, forecasting a rise from under 2x in 2024 to over 4x by 2032.
In 2024, KGL made significant strides in reducing its debt-to-equity ratio, which is expected to close at 0.75, down from 1.8 in 2023. The company is also engaging with the Ministry of Finance to optimize revenue and minimize the impact of its debt obligations.
KGL’s strategic plan includes comprehensive risk management measures, including regular reviews of its strategy, alignment of employee goals with corporate objectives, and ongoing discussions with ZESCO on payment obligations. The company is also implementing debt restructuring and foreign exchange hedging strategies to ensure long-term financial stability.
