Mercuria and Africa-focused energy investor Exergy have entered into a $250 million financing agreement aimed at supporting electricity generation and transmission projects in Southern and Eastern Africa. This deal, signed in Lusaka, represents a significant private-capital commitment to Zambia’s power sector and marks Mercuria’s entry into the regional electricity market.
The investment will primarily fund projects developed by Exergy’s subsidiaries, Lunzua Power Company and Lusitu Transmission and Distribution Company, pending regulatory approvals. Some projects are already in development.
Exergy operates across the power chain with Lunzua Power focusing on generation, Lusitu on transmission and distribution, and Kanona on electricity trading and balancing. This diversified structure allows Mercuria to engage in multiple segments of an African electricity market that faces various challenges, including inadequate generation and weak transmission infrastructure. This infrastructure gap hinders countries with surplus electricity from supplying neighboring markets that have shortages.
Exergy plans to implement a transmission highway to enhance Zambia’s connections with East African electricity markets and facilitate electricity trade among regional power pools. Zambia’s strategic location makes it crucial for such infrastructure as it connects to Southern Africa’s electricity system and shares borders with countries leading into East and Central Africa.
The investment comes as Zambia seeks to quickly increase its electricity supply following severe power shortages that highlighted its reliance on hydropower, threatening its mining sector. Mining is vital for Zambia, one of Africa’s largest copper producers. The government aims for an electricity supply of about 10,000 MW by 2031 to meet rising demands from various industries.
Mercuria’s involvement is notable, as it is a major independent energy and commodities trader, making this investment more than just a financing deal for a local electricity project; it positions Mercuria within a regional electricity market marked by power shortages, mining expansion, and cross-border infrastructure developments.
