Riozim Limited intends to sell majority shareholding to an investor who wins its tender to construct an ambitious long-standing $1,2 billion thermal power station in Sengwa, Gokwe North, according to company sources.
The Zimbabwe Stock Exchange (ZSE) listed company has been scouting for investors for the project since the early 90s, but was unable to conclude an agreement. But the names of the prospective investors are now known.
Nigerian billionaire Aliko Dangote has also previously expressed strong interest and submitted a firm bid, but like many suitors before and after him, the deal fell through.
Things looking up for RioZim
Things are, however, now looking up amid revelations that bids by five serious reputable foreign firms have been short-listed to select one that will fund the project and also take up equity.
Frenzied foreign investor interest in Zimbabwe, after over 15 years of isolation, should now make it relatively easy for RioZim to clinch an investment deal.
RioZim is now in the process of evaluating bids from US firm General Electric (GE) Power Systems, Chinese companies Sino Hydro, China Power, State Power Investment Corporation (SPIC) and State Nuclear Power Research of China.
GE and China Power are also reportedly to have submitted a joint bid for the 2 400MW Batoka Gorge hydro power project, jointly developed by Zimbabwe and Zambia.
Highly placed sources said the company wanted the investor who will eventually fund the project, to take up majority equity in the Sengwa power project.
“We will make proposals and select a bid that meets our expectations. We do not want to end up with an investor who will give us problems,” a source said.
Conditions for preferred investor
The investor awarded the contract to fund the construction will hold equity in the power plant to ensure they take active interest for success of the project to avoid operational problems similar to what transpired in Botswana.
Part of the conditions is also that the investor that will be awarded the contract for Sengwa should secure a power purchase agreement (PPA) with South Africa.
“For the first 700MW RionZim wants someone who will sell the power to ZETDC.”
Sources privy to the developments said interviews had already been conducted with three of the five potential investors while the last two will be interviewed next week.
The investors were furnished with a bankable feasibility study, which they evaluated over a period of 90-days and thereafter submitted proposals on the project.
Adjudication on the bids will follow soon after all prospective investors have been interviewed, a process insiders say will be completed in the coming week.
RioZim intends to build a coal fired power station based on a coal resource of 1,3 billion tonnes, capable of generating up to 2 800MW, more than Zimbabwe’s total installed capacity.
The project entails development of a coal mine, power station, water pipeline to the power station and a power transmission line to the national grid.
If successful, the project will go a long way in mitigating Zimbabwe’s current power shortage, with demand at 1 600MW against production of about 1 400MW.
Notably, the country cannot use all available capacity at Kariba South, recently expanded from 750MW to 1050MW due to low lake water levels in the Kariba Dam.
RioZim, has mining interests in gold, diamond and nickel (base metal) processing.