eBusiness Weekly
Africa Moyo
As the country becomes a magnet for billionaire global investors riding on President Emmerson Mnangagwa’s ‘Zimbabwe is open for business mantra’, fresh concerns have emerged over the availability of adequate energy to power existing and new mega projects to open.
Since his inauguration on November 24 last year, President Mnangagwa has pursued an economic revival anchored on attracting foreign investment, agriculture and mining.
Foreign investors have responded generously, and so far, the country has received firm investment commitments of up to $15 billion, according to government figures.
Several top international firms including Sinosteel of China, China Railway Engineering Group, General Electric of the United States and Karo Resources of Cyprus, have expressed strong desire to invest in various sectors of the economy.
However, given that not all of them intend to invest in power generation, market watchers are questioning the country’s capacity to feed electricity to all the new projects lined up by investors.
Current generation is averaging 1 200MW against the national demand of 1 600MW.
Demand for electricity is expected to rise to 1 844MW in June before peaking at 1 867MW in July and that trajectory is expected to continue in that fashion.
A fortnight ago Zimbabwe Power Company (ZPC), was generating 1 180MW from all its power stations.
Hwange was generating 315MW, Kariba (791MW), Harare (22MW), Bulawayo (26MW) and Munyati (25).
Zimbabwe invests in electricity generation
Zimbabwe has made deliberate efforts to invest in new power generation projects.
Major power projects include the expansion of Kariba South and Hwange Thermal Power Station.
Kariba has already been commissioned and an additional 300MW of electricity is being fed into the national grid.
The previous installed capacity was 750MW and the coming on stream of two units has pushed up the installed capacity to 1 050MW.
However, that does not mean all the 1 050MW would be generated all day because various factors such as dam water levels determine the amount of energy to be churned out although this is the peak output.
Energy and Power Development Minister Ambassador Simon Khaya-Moyo told Business Weekly that the coming on stream of Kariba South, and the efforts being taken to add two more units as Hwange, mean the country is in the right direction.
“In terms of availability of electricity, you will recall that the President recently commissioned Kariba South Power Station. We now have 300MW more power being fed into the national grid.
“We are now moving to Hwange where we want to add 600MW to the current installed capacity. As you might be aware, we are also in talks with our colleagues in Zambia over Batoka where we will generate 2 400MW,” he said.
“The output from Batoka would be shared among the two countries, which means we will get 1 200MW each. So we have adequate power to sustain all businesses that will start in the country given that we have more projects taking shape,” he added.
Minister Khaya-Moyo said the proposed investments would not be implemented at the same time, hence there were no fears of electricity shortages.
“The growth of the economy is not an event, but a process. We go step by step. Remember we have been in isolation for over 20 years with sanctions imposed on us and without any financial support from other countries,” he said.
More power projects on the cards
One of the top investors, General Electric, is interested and looking at ploughing funds into the Batoka power project.
Feasibility studies have shown that the Batoka hydro electricity project – which is shared by Zimbabwe and Zambia – requires about $6 billion.
Some international financial institutions are currently working towards raising $4 billion, and the African Development Bank (AfDB) is the lead arranger for the 2 400MW project.
Once completed, the project will improve the availability of power for businesses in the country.
GE Africa director originations Mr Reginald Max, recently said they are eying the Batoka power project, among many other energy projects.
“We have a track record and we have the financial muscle to undertake the Batoka project. We believe that power assets such as Batoka should be owned by the State.
“We will invest to develop the power station, but ownership will be retained by the Zimbabweans,” said Mr Max.
The interest by GE to undertake the Batoka project brings hope to many investors that their operations will not be affected by power outages.
ZPC general manager operations Engineer Washington Mareya, recently said they have a “production plan of 8076,27GWh” for this year.
Eng Mareya said ZPC – the power generating arm of Zesa Holdings – has lined up new electricity generating projects that have potential to produce 1 350MW on completion.
The projects include Hwange (600MW); Lupane coal bed methane (300MW); Insukamini (100MW) solar; Munyati (100MW) solar; Gwanda solar (100MW); Mutare Peaking Plant 120MW and Gairezi 30MW.
Eng Mareya said the solar projects are expected to start in 2020 and should be completed two years later.
The Hwange project, whose financial closure is understood to have been achieved, is set to be completed in 2020.
Close sources say the project could start as early as next month.
The engineering, procurement and construction (EPC) contract and loan agreement for almost 90 percent of the project cost are believed to be in place.
IPPs enter the fray
Government also wants to see small hydropower stations boosting the availability of electricity and about $300 million is set to be invested in such projects and the repowering of small thermal power stations.
Investments in small hydropower projects are seen as critical particularly after the success of four small hydropower stations; Nyamingura, Pungwe A and B, Hauna and Kupinga.
The power stations are feeding an average of 25MW into the grid daily.
It is thought that there is potential to develop more small hydro stations at 17 dams across the country, with Osborne, Gairezi, Nyangombe and Kondo dams, seen as the best sites.
Government is looking for investors for “priority” mini-hydro power projects such as Tokwe-Mukosi ($40 million); Gairezi ($90 million); Rusitu II ($10 million); Rusitu ($2,5 million) and Tsanga ($8 million).
The hydro-power stations can produce upwards of 53MW, with an annual output of 152 000MW.
Concerns over “low renewable energy feed-in tariffs” have, however, affected most IPP investors.
Currently, the average tariff is USC9,86 per kWh.
IPPs want the tariff to be increased to about 12c per kWh for them to be viable and attract funders for their projects.
But Minister Khaya-Moyo said not all IPPs are not taking off.
“Those with capacity are not complaining. It’s not everyone complaining over the tariff,” said Minister Moyo.
