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Zambia is reportedly seeking to remedy an erroneous payment made by its power utility to China while it is still finalizing a prolonged debt restructuring deal with the nation, a Treasury official said.
ZESCO had been accumulating revenues from electricity sales in a securitized account from a power plant that Chinese companies built and financed, and “unfortunately” transferred about $80 million from the account, Secretary to the Treasury Felix Nkulukusa said.
Bloomberg News reports that the country reached a memorandum of understanding with its official creditor committee co-chaired by China and France in October last year.
The power uility was, however, yet to sign a final agreement with the Asian nation and only once that’s done can payments resume.
The misstep highlights the complexities of the debt restructuring that began in 2020 when Zambia became Africa’s first nation to default during the pandemic era.
It also brings into focus the sometimes opaque securitized, or escrow, accounts, that can accompany project loans.
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The government Zambian has proposed that the payment count as an advance on the interest accumulating on its debt to China since 2023, Nkulukusa said in an interview late Sunday in Lusaka.
“That is the discussion we have. We’re looking for a solution to that,” he said.
Bloomberg reports that ZESCO did not respond to requests for comment.
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