Martin Kadzere Business Reporter
ESSAR Holdings, the majority shareholder in New- Zimsteel, has struck a deal to lease Zesa’s Munyati power station to ensure reliable electricity supplies to its Redcliff steel plant, a Cabinet minister has said. Industry and Commerce Minister Welshman

Ncube said in an interview yesterday that Cabinet recently approved a Memorandum of Understanding between the power utility and Essar.
“They (Zesa and Essar) negotiated through the Ministry of Energy and Power Development and their MoU was approved by the Cabinet,” said Professor Ncube.
His ministry led the US$750 million acquisition of the Government’s 54 percent stake in Zisco by Essar.

Munyati is a coal-fired thermal unit in Kwekwe, about 200km west of Harare. It has an installed capacity of  98 megawatts.
Munyati Power Station will guarantee Essar, which had initially indicated plans to build a 600-megawatt plant, of uninterrupted electricity supplies at a time when Zesa is unable to meet local demand.

Minister Ncube could not give details about the lease tenure, but sources at the Ministry of Energy and Power Development said Essar had negotiated for 30 years while Zesa wanted to lease it for only 10 years.
Essar would rehabilitate the plant at a cost of up to US$4 million and also wanted permission to sell excess power to customers of their “choice”.

“Those were the sticking issues about the deal as the ministry felt that the tenure that Essar wanted was too long and also that allowing Essar to sell excess power to customers of their choice could have resulted in them exporting,” said a source that asked not to be named.
No comment could be obtained from Energy Minister Elton Mangoma.

Essar plans to invest US$4 billion in Zimbabwe’s steel industry in the next 10 years, resident director for Africa, the Middle East and Turkey Mr Firdhose Coovadia said in February.

But he said the company will start when mining rights, previously owned by Zisco, are transferred to the new entity.
Under the deal, Essar also acquired 80 percent of Zisco’s mineral assets in Mwenezi, Buchwa and Bimco but Government is yet to transfer the mining rights to Essar,

more than a year after the deal was sealed.
Prof Ncube said the Minister of Mines and Mining Development Dr Obert Mpofu had the capacity to transfer the claims to the new entity.