ZESA Holdings is negotiating for loans amounting to about $350 million with a regional financial institution mainly to fund power generation projects, a source has said. The power utility is seeking money to partly fund the expansion of Hwange Thermal Power Station where it is expected to inject $144 million as part of its equity contribution.Zesa contracted Sino-Hydro to expand capacity at Hwange, the country’s largest power plant at a cost of $1 billion. Initially, Zesa wanted to raise the funds for Hwange by exporting power to Botswana through a four-year deal worth $120 million.
The deal, however, stalled after Botswana Power Company put on hold talks for power imports following the closure of two major smelters in the country.
Zesa is also seeking about $52 million for a complete overhaul of Hwange Unit Two and $56 million for rehabilitation of Harare power plant, the source said, adding the draw-downs on part of the loans would start “as early as end of this month or early December”.
“Zesa is leveraging on its huge debtors book (estimated at $1 billion) to borrow,” said the source.
No comment could be immediately obtained from Zesa by the time of going to print yesterday. In an update of the expansion projects, Zesa said the Kariba South Extension is now 58 percent complete and within schedule. The first unit is expected to come on line in December next year.
The power utility said the Sino-Hydro representatives were in the country recently finalising all agreements required for financial closure for the Hwange expansion project. Zimbabwe produces an average of 1 100MW against peak demand of 1 400MW. To meet the shortfall, the country is importing up to 350MW from South Africa and Mozambique.