Maamba Energy Limited (MEL) is one of Zambia’s largest independent power producers (IPPs) and operates Zambia’s largest coal mining concession.This project is looking to double MEL’s thermal power plant capacity from 300 MW to 600 MW, leveraging coal from the nearby Maamba mine. Given Zambia's strong reliance on hydroelectric power and acute power shortages made worse by climate change which led to an unprecedented drought, this expansion is crucial.
Key stakeholders, including the National Pension Scheme Authority (NAPSA), two leading commercial banks, and other local investors, have come together to support this initiative, signalling a strong commitment to strengthening Zambia’s energy infrastructure.
This transaction centres on an off-take model via a power purchase agreement and financing for MEL’s Phase II Project in Maamba, which includes the design, development, construction and operation of new power generation assets. Under a Master Facility Agreement, at least two leading commercial banks are to contribute over US$50 million to the project, which is valued at approximately US$400 million.
August Hill & Associates is playing a central role in shaping the transaction, providing comprehensive legal advisory services to one of the commercial banks at every critical stage. From meticulously reviewing the Master Facility Agreement between NAPSA and MEL, to expertly drafting the Commercial Terms Agreement between the commercial bank and MEL, the firm is ensuring that the transaction is underpinned by a robust legal framework. August Hill & Associates is also delivering incisive legal opinions that are integral to the transaction's execution, solidifying their reputation as a trusted legal partner in high-stakes deals.
The transaction required a thorough review of legal documents, including a credit facility with a letter of credit and an escrow agreement to streamline financial transactions among the parties.
The successful completion of the Maamba Phase II project is expected to alleviate Zambia’s power shortages and provide a more stable energy supply for residential and industrial consumers, marking a vital step toward regional sustainability and energy independence. By expanding beyond hydroelectricity, Zambia is strengthening its resource management and mitigating climate-related risks to the energy infrastructure. The project also supports regional infrastructure development which is crucial for economic growth and investment.
This transaction underscores the critical role financial innovation plays in driving energy growth. Transactions such as these are key to building a stable and sustainable energy future as Africa addresses its energy challenges.