Chinese President Xi Jinping’s historic State visit to Zimbabwe will expedite access to more than $1 billion from two China State-controlled financial institutions for two key power projects in the country.
The discussions held on Wednesday with the Chinese delegation led by President Xi yielded pledges for funding for Hwange Thermal Station Extension and construction of the 100 megawatt Gwanda solar project.
Energy and Power Development Minister Dr Samuel Undenge presented the energy projects, among deals singled out for funding support to President Xi and his team during an event witnessed by Present Mugabe and several high ranking Government officials.
Completion of the two power projects, which are among a host of key initiatives Government and private sector have embarked on to mitigate debilitating power shortage, will add 700MW to the grid.
But access to funding will determine the time it will take to complete the projects and ameliorate the country’s widespread power deficit.
However, endorsement of the energy projects, part of the landmark agreements signed with China during the Asian giant President’s State visit, will expedite access to funding from the State financiers; Chinese Eximbank and China Development Bank.
The China Development Bank is a State owned financial institution in the People’s Republic of China led by a Cabinet minister level Governor, under the direct jurisdiction of the State Council.
The Export-Import Bank of China (China Eximbank) is one of the three institutional banks in China chartered to implement State policies in industry, foreign trade, diplomacy, economy, and provide policy financial support.
The loan facilities, extended on buyer’s credit basis by equipment suppliers from the world’s second biggest economy, will be extended at concessionary rates of 2 percent over a period of up to 20 years.
Zimbabwe is generating about 900MW, largely weighed down by constrained output at the outdated Hwange thermal station and reduced generation at Kariba due to low water levels in Kariba Dam, against peak demand of 2 200MW.
Shortage of power has negatively affected activities in virtually all sectors of the economy, key among them agriculture, manufacturing mining and tourism.
Fears abound this might affect realisation of targets set out in Government’s foremost medium term economic blueprint, Zim-Asset 2014-2018.
Extension of Hwange Thermal Power Station is expected to cost about $1,5 billion, with the Chinese contractor for the project providing $1,1 billion. Gwanda solar project will be executed at a turnkey cost of $202 million.
The State Procurement Board Chinese awarded the contracts for extension of Hwange’s capacity and construction of the solar project, which will widen Zimbabwe’s energy mix, to Chinese firms curb power deficits.
As such, the discussions held during President Xi’s recent visit resulted in deal approval and signing of the commitments to expedite funding for the projects.
“Among deals discussed, approved and signed are Hwange thermal extension, TelOne fibre optic, Parliament building and Shanghai giants CHiNT Electric Co for the 100MW solar farm project in Gwanda.
China’s Sino Hydro, also awarded the engineering procurement and construction contract for the already underway 300MW upgrade of Kariba South, will carry out the 600MW extension of Hwange generation capacity.
Another Chinese electronic engineering giant, CHiNT Electric Co won the tender for the construction of the 100MW Gwanda
solar project, part of Government’s concerted efforts to stem out the crippling tide of power deficit.
Analysts said President Xi’s historic State visit to Harare, reciprocal to President Mugabe’s State visit to the China in August last year when several mega deals were signed, will leave a lasting legacy on the domestic energy sector, as it opened and fast tracked access to requisite funding.
Apart from Hwange, Kariba South and Gwanda Solar projects Government is pursuing the Batoka Gorge hydro power project jointly with Zambia and has awarded the contract for the 100MW Mutare peaking power plant.
Government has also issued more than 20 licences to Independent Power Producers, notably China Africa Sunlight Energy, which intends to construct a 2x300MW coal fired power station in Matabeleland North Province.
The loan facilities for the key energy projects, which form part of the infrastructure and utilities cluster of the Zim-Asset policy document, is expected to take effect in the first half of next year, Finance and Economic Development Minister Patrick Chinamasa said.