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Noah Gwariro

Business Reporter
THE Zimbabwe Power Company is struggling to secure up to $6,5 billion required to fund projects to close a debilitating demand deficit because investors feel its sister company, which markets the power, is not credible off-taker.

ZPC chief executive Engineer Noah Gwariro said the utility has faced challenges getting investors whenever it presented the Zimbabwe Electricity Transmission and Distribution Company as the buyer of the electricity.

Zesa Holdings’ generation unit is working on at least 10 projects including ramping up capacity at two major power stations, Kariba and Hwange, starting Greenfield projects such as Batoka and re-powering the three small thermals.

Zimbabwe is battling to attract investment into most of the projects to close the demand gap, with generation at 900MW against demand at peak periods of 2 200MW.

The country needs the funding running into several billions of dollars to stop the debilitating power cuts, which at times run for days. It has not invested in new generation capacity since the mid 1980s completion of Hwange.

“Funding these projects has proved challenging when ZPC presents ZETDC as the off-taker. Most financial institutions feel that ZETDC is not a credible off-taker,” he said.

Engineer Gwariro said given the legacy loans on the ZPC balance sheet, most institutions prefer a clean entity hence the formation of a special purpose vehicle for the Kariba South generation capacity expansion project.

“For security reasons, revenue from existing power plants is ring-fenced to the expansion or refurbishment of that particular power plant, leaving Greenfield power plants like solar and coal bed methane to be project financed,” he said.

The power utility signed an agreement with Sino Hydro last year for the 2×150 megawatts expansion of Kariba South, the country’s biggest power producer with installed capacity for 750MW, although output has been scaled down.

Kariba South power station is situated on the Zambezi River, which feeds the Kariba Dam. The Zambezi River Authority, which regulates Zimbabwe and Zambia’s border river, reduced water allocation for power generation to the two countries because dam levels have fallen.

Financial closure for Kariba South was achieved in October last year and the project officially commenced on November 10 the same year.

The 40-month long construction period is expected to be completed by 10 March 2018.

ZPC is also working on the 2x300MW expansion of Hwange Power Station, the country’s largest power station by design capacity at 920MW, but currently able to generate an average of 475MW due to the old state of the power plant.

An engineering, procurement and construction contract was signed between ZPC and Sino Hydro for the expansion of the Hwange Power Station, but financial closure for the project is only expected before end of this year.

Project financing for Hwange is being sourced from China Exim Bank, development financial institutions and local and regional banks such as Stanbic Bank.

Speaking at the same Indaba Finance and Economic Development Minister Patrick Chinamasa said Zesa should work out a way to allow large consumers of power, especially big mining firms, to import power from the region.

This follows announcement by Energy and Power Development Minister Samuel Undenge last week that large consumers of electricity such as Zimplats, Mimosa, Zim-Alloys and Sable Chemical would have supplies cut by up to 25 percent, in efforts to ease heavy load shedding to domestic users.