Golden Sibanda Senior Business Reporter
THE State Procurement Board has awarded CBZ Bank a tender to float energy bonds to raise $200 million for the Gwanda solar and Gairezi hydro power projects, being undertaken by State power utility Zimbabwe Power Company, with aggregate capacity of 130 megawatts.
This follows approval by Government for the local portion of funding needed for the projects to be raised on the domestic market, which will quicken pace of the projects as opposed to raising all the funds offshore.
In terms of the Gwanda solar project, Finance and Economic Development Minister Patrick Chinamasa had written to ZPC managing director Noah Gwariro saying much of the civil works could be sourced locally. In that regard, he asked ZPC to engage CBZ bank to structure the bond save for the engineering, procurement and construction contract of procurement of generators for.
“I (therefore) kindly request that you engage CBZ Bank to structure and issue a bond to raise funding locally. Any foreign currency component of the EPC contract of funding will be given priority in payment depending on availability of foreign currency,” the minister said.
As such, SPB principal officer Samson Mutanhaurwa, through PBR 0518 of June 13, 2017 said there was no objection in terms of the request by the Zimbabwe Power Company for the direct engagement of CBZ Bank to structure and issue energy bonds for Gwanda and Gairezi, Mr Mutanhaurwa said this is in line with Section 7 (2) of Procurement Regulations for requirements of local interest.
“There is no objection to the accounting officer’s request for direct engagement of CBZ Holdings to structure and issue a bond to raise funding locally for Gwanda solar and Gairezi hydro projects, subject to submission of a report on the actual costs for the services,” he said.
CBZ Holdings chief executive Never Nyemudzo said the company had not received official communication yet on its appointment by SPB, but stressed the group would embrace the opportunity with both hands if given the assignment. However, confirmed CBZ had been communicating with ZPC over the request to appoint CBZ for the bonds.
Gwanda was awarded at an engineering, procurement and construction contract of $184 million while the tender for the Gairezi project was awarded at the lowest bid to specification EPC cost of $128 million. For the Gwanda project, CBZ would raise $140 million while the balance of the EPC contract would be raised by China Eximbank.
The Gwanda solar project would be developed in modular phases until the solar power station’s full lot of 100 megawatts has been achieved.
The Herald Business has it on good authority that CBZ Bank would also raise funding for paying of local construction supplies or works at Gairezi amounting to about $50 million, which will be mobilised from local pension funds. Pension funds in Zimbabwe hold $10 billion worth of assets and are compelled by law to invest 10-15 percent in prescribed assets. The balance needed for the project would come from Afreximbank.
Gwanda and Gairezi projects have been accorded prescribed asset status by Treasury. Intratrek Zimbabwe executive chairman Wilson Manase said he was ecstatic, as the approval by Government and SPB showed that reforms by Government’s policy on the ease of doing business was paying dividends.
“I am pleased to confirm that against all odds the Gwanda solar project is well on course as evidenced by this development and the project being awarded prescribed asset status by the ministry of finance. This augurs well for Zim-Asset and the Zimbabwean energy sector, as electricity is the chief enabler of economic activity,” he said.
Multi-billion dollar asset company, CHiNT Electric Co, listed on China’s Shanghai Stock Exchange, will build the Gwanda plant while Bharat Heavy Equipment Limited, Angelique International Limited, both from India, and their local partner, Intratrek Zimbabwe will build Gairezi.
BHEL is a leading Indian hydro turbine manufacturer boasting an average annual turnover in excess of $7 billion, while Angelique International Ltd operates in over 34 countries and averages top line of $300 million per year. Angelique International undertakes turnkey projects globally in power, water, irrigation and agriculture sectors and industrial projects in Africa, Middle East, South and South East Asia.
As part of a broad strategy to resolve power shortage in Zimbabwe, ZPC, tendered for other solar energy projects, each with capacity of 100MW. The projects are Insukamini in Bulawayo, to be undertaken ZTE of China and Munyati, to be developed by Jaguar Overseas Limited of India.
The Zimbabwe Energy Regulatory Authority has also approved five independent solar projects namely Marondera-based De Green (50MW), Geo-base in Gwanda (50MW), Yellow Africa in Ntabazinduna (50MW) and Plum Solar to be built in Bulilima-Mangwe (5MW). The projects have combined investment value of $250 million.
The State power utility has also contracted China’s State-owned Sino Hydro to undertake expansion of Hwange Power Station, which has installed capacity of 920MW, but currently averages output of 400-500MW due to constraints emanating from the advanced age of the plant.
Further, Sino Hydro has also completed more than 80 percent of the works for the extension of the 750MW Kariba South Hydro power station’s capacity, which will see the addition of another 300MW on the plant.
Zimbabwe imports electricity from regional country utility’s that include Electricity De Mocampique of Mozambique, Eskom of South Africa and private generation such as Lusemfwa of Zambia to cover its deficit.