Zim firm seals $2bn power plant deal

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Golden Sibanda
Listed multi-commodity miner RioZim limited, has selected Sino Hydro’s sister company Power Construction Engineering Company (Power China) to build its $2,1 billion coal fired power plant in Sengwa, Gokwe North, in a development that will further ameliorate electricity shortage in Zimbabwe.

Sengwa power station will on completion generate 2 400 megawatts, part of which will feed into the national grid to secure Zimbabwe’s fragile power generation capacity, while the remainder will be exported.

According to RioZim, the first 700MW of power from Sengwa will be sold to State power utility, Zesa.

Limited internal electricity generation capacity resulted in Zimbabwe resorting to devastating and regular power cuts, which negatively affected commercial, industrial and household activities.

This time expectations are high that the ZSE listed firm has struck the right codes and secured an investor that will deliver on the long-standing project; mooted as early as 1990.

This stems from the fact that Power China owns Sinohydro, which delivered 300 megawatts at Kariba South at an estimated cost of $533 million and has also been enlisted to extend Hwange Power Station by 600MW.

Power China officials are expected in Zimbabwe early next month to sign binding exclusivity agreements with the Zimbabwe Stock Exchange (ZSE) listed RioZim.

In fact, Power China official could have come to Zimbabwe to sign relevant documents to the deal, but the visit was put on hold as its timing coincided with the period of the harmonised elections.

Power China beat strong competition from six other suitors who were bidding to secure the lucrative contract following extensive evaluation of the submissions each one of the bidders presented.

RioZim evaluated bids from US firm General Electric, Power Systems, Chinese firms Sino Hydro, China Power, State Power Investment Corporation (SPIC) and State Nuclear Power Research of China.

GE and China Power also reportedly submitted a joint bid for the 2 400MW Batoka Gorge hydro power project, which is to be jointly developed by Zimbabwe and Zambia on the Zambezi River.

A senior company official who spoke on condition of anonymity told Business Weekly that evaluation of five bidders who were vying to land the contract for Sengwa had been concluded.

“We have completed the evaluation and have selected one, which we want to sign exclusivity agreements with. We are due to meet officials from Power China,” the source said.

“The official were supposed to come but could not come because of elections, they wanted to come this week but they said ‘would it be safe’, so they said we will come after elections,” the source added.

The source said RioZim’s board believe that Power China could best deliver on the project, as its sister company had demonstrated capacity to deliver and secure project funding for local project.

“China Power has undertaken international projects. You might also be aware that they already have presence here, have already delivered on Kariba South and are now doing Hwange.”

Zimbabwe, which has borne the brunt of acute shortage of power due to limited internal generation capacity, may soon have excess power, which will see the country exporting into the region.

Current demand for power stands at an average of 1 400MW against internal generation of 1 200MW, but which may not always be available due to water rationing at Kariba Dam and faults at Hwange.

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 current 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.

There is renewed hope in the economy and indications are the country needs more power in relation to demand that is likely to peak as more companies mainly in the manufacturing and mining sectors open.

Industry statistics reveal that many companies are now operating above 60 percent capacity while new players such as Indian firm Varun Beverages (Pepsi) is reportedly operating at 100 percent, exerting more pressure on foreign currency demand.

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