The Kariba South Power expansion project has been thrown a lifeline after a leading financial institution last month agreed to fund Zimbabwe Power Company’s counterpart payment, which will result in 150 megawatts being generated by December next year and another 150MW by March 2018.
China’s Export and Import Bank is providing the bulk of the funding of about $320 million to cover engineering, procurement and construction while ZPC is expected to chip in with about $213 million from development finance institutions.
The bank (name withheld) will avail $60 million and R650 million or equivalent. The money will only be available on a progress need basis reportedly to avoid diversion to other requirements.
The project, being undertaken by a Chinese contractor, Sinohydro, had been hanging in the balance as ZPC struggled to raise its part of the funding. But Zesa spokesperson Mr Fullard Gwasira last week said the project was back on course following the funding agreement with the bank.
“Kariba Extension is progressing well with 57 percent of the construction works completed to date,” said Mr Gwasira in emailed responses to The Herald.
“It is anticipated that the first 150MW would be fed into the national electricity grid by December 2017 while the other 150MW would be dispatched onto the grid by March 2018,” he said.
President Mugabe commissioned the $533 million power project in 2014, which is in line with ZimAsset’s cluster on development of infrastructure and utilities.
The cluster identifies energy and power development as key economic enablers to productivity and socio-economic development.
The sector has been experiencing challenges over the years due to dilapidated and obsolete generation equipment and infrastructure as well as lack of adequate capitalization.
However, the $320 million loan agreement for engineering, procurement and construction that was extended by the Chinese government through China Exim Bank made the project a reality.
The balance of $213 million from ZPC’s development finance institutions will cover consultancy services, supervision, water supply agreements and related costs.
Zimbabwe’s total peak demand is about 2 000MW but is producing about half of that. It supplements the shortfall through power imports from neighbouring countries.
Kariba South’s current generation capacity is about 750MW but was generating about 600MW as at September 30, 2016 while Hwange Thermal Power Station generated 432MW on the same date.
Munyati Power Station in the Midlands generated 17MW while Bulawayo and Harare Power stations did not produce anything as of Friday last week. herald