Zimbabwe’s quest for energy self-sufficiency has received a major boost after State power utility, Zimbabwe Power Company (ZPC), secured $176 million to finance the rehabilitation of Harare power station.
The African Export and Import Bank (Afreximbank), which has released hundreds of millions of US dollars in
support of Zimbabwean firms and projects, will once again fund the Harare project.
Notably, a significant portion of the funding from the regional bank would be used towards construction of the 120 megawatts Mutare peaking power plant, meant to supplement local power supply during high demand periods.
Local firm, Helcraw Electrical, whose technical partner is Ansaldo Energia, won the tender for Mutare peaking plant. Ansaldo Energia is Italy’s largest supplier, installer and service provider for power generation plants and components and one of the world’s leading players.
The Harare project had been on ice since 2013 when the contract for the rehabilitation of the thermal power station was awarded to Indian firm, Jaguar Overseas Limited (JOL), which struggled over the years to secure the funding.
Initially, JOL, which signed an engineering, procurement and construction contract with ZPC in 2013, sought to raise the requisite funding for the project, but was turned down by would-be financier, India Eximbank.
When the India Eximbank shut the door in its face, Jaguar approached Afreximbank as an alternative source of the needed funding, but again faced another hurdle in the form of maximum project funding, since the bank could only fund to a limit of $50 million.
It had to take the intervention of ZPC — the electricity generation arm of State power utility, Zesa Holdings, for
Afreximbank to agree to finance the project.
“Afreximbank reached CP fulfilment in December 2018, after financial closure on the US$176 million facility had been reached on April 30, 2018.
“Of the funds available for drawdown, US$56 million is available for drawdown by both the Mutare Peaking and Harare Repowering Projects as foreign currency,” Zesa spokesman Fullard Gwasira said through emailed responses to questions.
Jaguar was contracted to re-power Harare power station by replacing the old plant with a modern diesel fired one, which has better capacity and efficiency.
The re-powering project for Harare Power Station was scheduled to take 24 months and to ameliorate Zimbabwe’s once crippling power deficit as well as raise the plant’s generation capacity from 90MW to 120MW.
JOL also won the contract for the re-powering of Munyati Power Station. But in 2017 ZPC expressed reservations over delays by JOL in starting work on the re-powering of Munyati, which had not progressed since 2015.
ZPC had sought permission from the then State Procurement Board (SPB), now procurement Regulatory Authority of Zimbabwe (PRAZ) to cancel the contract for re-powering of Munyati over delays experienced in securing funding to rehabilitate the power plant.
The Southern African country has over the last decade faced acute power shortage due to lack of investment in new generation systems.
Zimbabwe’s peak periods energy demand stands at about 1 600MW while it has internal generation capacity which averages around 1 400MW.
The difference, until recently, was met through imports from Eskom of South Africa (300MW) and Hydro Cahora Bassa of Mozambique (50MW).
For a long time Zimbabwe has relied on expensive imports, due to limited internal generation capacity and advanced age of most of its thermal power plants, in order to meet the growing internal demand for power.