DRC seeks stake in US$270 million Zambia power

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The Democratic Republic of Congo is positioning itself as a strategic partner in a $270 million power interconnector project linking Zambia to regional energy grids, signaling an intensifying competition for energy infrastructure dominance across Southern Africa. This development, anchored by Green Building Africa's investment framework, underscores how African nations are weaponizing cross-border power assets to secure energy independence and revenue streams in an increasingly resource-constrained continent.

## Why is DRC interested in Zambia's power infrastructure?

The DRC's interest in this interconnector reflects a calculated shift in regional energy politics. The Democratic Republic possesses Africa's second-largest hydroelectric potential—estimated at 100+ GW—yet exports minimal power due to aging infrastructure and underinvestment. By acquiring a stake in Zambia's interconnector, the DRC gains both revenue exposure to regional power sales and leverages its own hydroelectric assets as a competitive advantage in the Central African energy market. Zambia, facing chronic electricity deficits and currency pressures, welcomes co-investment that transfers project risk away from government balance sheets.

The $270 million interconnector represents critical infrastructure for Zambia, which relies heavily on hydropower (65% of supply) and faces seasonal water shortages. A functioning regional grid allows Zambia to import power during dry seasons and export during surplus periods—a model that has proven economically viable across Southern Africa's existing interconnectors (South Africa–Botswana, Zimbabwe–South Africa).

## What does this mean for African energy investors?

This project signals maturing cross-border energy markets in Sub-Saharan Africa. Institutional investors have historically avoided Central African power infrastructure due to currency volatility, political risk, and thin liquidity. However, Green Building Africa's involvement—a fund-of-funds focused on renewable and grid infrastructure—suggests institutional capital is now flowing into previously illiquid assets. The interconnector model reduces single-country risk by distributing revenue across multiple markets and creating natural hedges against local currency depreciation.

DRC's stake-seeking behavior also indicates growing sophistication among African governments in infrastructure co-ownership models, moving beyond pure debt financing toward equity participation. This approach preserves fiscal space while maintaining governance influence over critical assets.

## What are the financial and geopolitical implications?

At $270 million, this project falls within the optimal financing window for African infrastructure: large enough to attract institutional capital, small enough to close without extended development timelines. Comparable regional interconnectors (Tanzania–Kenya transmission lines, Mozambique–South Africa power cables) have historically delivered 8-12% IRRs over 20-year concession periods, depending on offtake agreements and currency stability.

However, DRC's participation introduces both opportunity and risk. The DRC's recent Eurobond issuance (2023: $1.5 billion at 10.75% yields) reflects its cost of capital. If the DRC finances its stake through bilateral or multilateral lenders at concessional rates (likely via AfDB or World Bank), the project becomes more bankable. Conversely, if the DRC pursues Chinese financing (standard in Central Africa), terms may include commodity-linked repayment clauses tied to copper or cobalt exports—creating execution risk if resource prices collapse.

The interconnector also strengthens DRC's hand in regional energy diplomacy, positioning Kinshasa as a gateway supplier to Southern African markets currently dependent on South African coal-fired plants. As the continent's energy transition accelerates, hydroelectric-based supply chains offer premium valuations in ESG-focused portfolios.

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