Honde Hydro Power Consolidated (HHPC), a wholly owned subsidiary of PGI Group Limited, is seeking to raise $5 million through issuance of a secured corporate debenture with a tenure of five years to fund a 2,3 megawatts hydro power project. The bond has since been granted Prescribed Asset Status by the Ministry of Finance and Economic Development. The funds raised will be used to develop the Hauna hydro power station.HHPC is involved in the development and management of hydro power stations in Honde Valley, Eastern Highlands of Zimbabwe. Since 2009 HHPC has successfully established five operational run of river schemes all of which are located on rivers in the Nyangani massif.
The group also operates five mini hydro schemes designed to generate a total annual average output of 74.296MW, which is sold to Zimbabwe Electricity Transmission and Distribution Company.
The schemes, all of which are operational and dispatching electricity into the national grid consist of 1.1MW Nyamingura Scheme on Nyamingura River, which was commissioned in 2010, 2.2MW Duru scheme on the Duru River commissioned in March 2013, 2.7MW Pungwe A scheme on the Nyamombe River commissioned in January 2013, 15MW Pungwe B scheme on the Pungwe River commissioned in March 2015 and 3.8MW Pungwe C scheme on the Chiteme River commissioned in March 2016.
HHPC has been successful in its quest to be an independent power producer and the bond is set to raise funding for its sixth power plant, the 2.3MW Hauna Power Station on Ngarura River in the Eastern Highlands. HHPC has an arrangement with ZETDC where the latter is the sole buyer of all electricity produced.
In its documents, HHPC states that it has a project specific power purchase agreement with ZETDC which governs the terms of the trade in power. This comes as other IPP have been giving endless excuses for failing to take-off, blaming ZETDC for offering subeconomic tariffs. All electricity produced by independent power producers is supposed to be connected to the national grid.
According to HHPC, the group has an agreement with ZETDC which states that the sole power distributor will and must purchase all electricity generated by the plant and each scheme must sell all its output to ZETDC. A meter that measures the output is located at each power station, the tariff to convert kilowatt hours into a United States Dollar payment is set out in each power purchase agreement and complies with the ZERA regulations on the tariff methodology. At the same time ZETDC is obliged to pay for the electricity within 20 business days of the month end for all power stations.
From its experience, the company states that powers purchasing agreements work well and that ZETDC is a reliable counterparty. Any issues that arise such as interruptions to their transmission system (which prevent the dispatching of electricity into the grid) have been dealt with timeously. This is despite claims by other IPPs who are failing to take-off that ZETDC is not reliable and flexible on tariffs.
Over the past years, Government had been concerned with failure of Independent Power Producers (IPPs) to get their proposed projects off the ground, years after they were licenced to construct power stations. The Zimbabwe Energy Regulatory Authority (ZERA) has licenced more than 20 IPPs with capacity to generate more than 5,000 megawatts (MW). However, few projects have taken off the ground due to the heavy capital outlays required. IPPs such as RioZim’s Sengwa have taken more than a decade to take off.
IPPs are important in bridging the electricity gap and their contribution will go a long way in in reducing the deficit and even making electricity more affordable to the majority. The Government, is also working to close the electricity supply gap in the country through expansion projects at Kariba South Hydro Power Station and Hwange Thermal Power Station. – Wires