Felex Share Senior Reporter—
Zimbabwe Power Company (ZPC) has raised $116 million as its equity contribution towards the expansion of Hwange Thermal Power Station, paving way for the financial closure of the $1,1 billion project. The power generating firm has a contractual obligation of raising $314 million to cover project development costs.
The Herald understands that the $116 million, enough to kick-start the project, was secured from Standard Bank South Africa ($40 million) and Afreximbank ($76 million).
The remaining amount would be released as per project requirement. ZPC’s equity contribution was the major condition precedent, which was stalling the financial closure of the project.
Sinohydro, a Chinese firm contracted to carry out the project, told The Herald that China Eximbank — which is expected to release a US$998 million loan for the task — was ready to disburse the funds.
The funding will enable ZPC to add 2x300MW generators, commonly referred to as Hwange 7 and 8, to increase power output from the country’s biggest thermal power plant. The power station has installed capacity of 920MW. ZPC acting managing director Engineer Josh Chirukuutsi said the firm had cleared all outstanding issues to pave way for the financial closure.
“ZPC has fulfilled all the conditions precedent for financial closure and we are now expecting the first draw-down for the loan,” he said.
“It is all done and we are only left with processes of disbursement, but by the end of the month we should be able to draw-down from our bank. The amount is a lot, but it is going to be released as per project requirement. That is how it is structured.”
Zesa Holdings chief executive Engineer Josh Chifamba said: “Before disbursements are done, there are conditions which should be met. All those conditions precedent have been met. “What we are now waiting for is disbursement from where we are getting our money, otherwise all the prior outstanding issues have been cleared.
“We are waiting for the bureaucracy of the banks and from there we will be moving to the groundbreaking ceremony, which will be done by the highest office in the country.”
ZPC had initially hoped to seal the funding agreement with Sinohydro in 2016, but missed the time line due to unfulfilled conditions.
The latest development comes at a time Sinohydro has completed the first unit of the Kariba South power expansion, which is now adding 150 megawatts to the national grid.
The remaining unit, with capacity to churn out another 150MW, is expected to be running by March.
The projects are part of Zanu-PF’s economic recovery programme under the Zim-Asset Infrastructure and Utilities Cluster.
Sinohydro chief representative in Zimbabwe Mr Yifeng Wu said of the Hwange project: “On our part, we are ready and China EximBank is ready and we hope the first disbursement will be happening soon as per projections and the project officially commences.
“As the contractor, we are doing preparatory works, while manufacturers in China have already started the manufacturing of the main equipment needed for the project. All the agreements and documents are in place.
Parliament has ratified the Hwange project loan and a power purchase agreement between Sinohydro and the Zimbabwe Electricity Transmission and Distribution Company is in place.”
Zimbabwe Energy Regulatory Authority (ZERA) has approved a tariff of 11c/kWh.
The projects being carried out will see Zesa cutting on power imports, which are costing the power utility.