ZESA Holdings expects to raise $314 million by end of this year for its equity contribution towards Hwange Power Station capacity expansion to pave way for financial closure for the project. The Hwange Power Station expansion project will add 2×300 megawatts coal fired units to be installed adjacent to the existing 920MW power plant. The $1,5 billion project will also include transmission building of infrastructure to enable power evacuation from the plant while new substations will be constructed at Hwange and Sherwood.
An engineering, procurement and construction contract was signed in 2014 with SinoHydro of China. A $997 million preferential buyer’s credit agreement was signed with China EximBank in December 2015.
ZESA Holdings chief executive Engineer Josh Chifamba told the Parliamentary Portfolio Committee on Mines and Energy yesterday that ZESA had been negotiating with several financial institutions to raise the equity contribution required for the project to take off.
“We have not yet started on that project because we are still awaiting financial closure and as Zimbabwe Power Company we are supposed to raise $314 million for equity funding, the rest is obviously covered by a loan from China. We believe and we are hopeful that by year-end we should have raised that money. We have had some very encouraging discussions with some banks towards that,” said Eng Chifamba.
Eng Chifamba said works done on the project include topographical surveys, geo-technical surveys and coal analysis to enable designs of the power plant and transmission infrastructure.
Government, through ZESA, is working on increasing domestic power generation to bridge the gap between supply and demand with production at 1 000MW against peak demand of 1 400MW. Eng Chifamba said there are significant challenges in expediting completion of a number of energy projects, especially related to what he termed the “low electricity tariff” the utility is charging consumers.
“The tariffs we are charging are not attractive to investment. At the moment our tariffs are not reflective of the costs we are incurring as a utility and I could say we are supplying electricity at a loss,” he said.
In addition to Hwange, Sino Hydro won the contract for the expansion of Kariba South Power Station to add 300MW to its the current output of 750MW at a cost of $533 million, also funded through a China Eximbank loan.
Eng Chifamba said the Kariba South project is progressing well and currently stands at 62 percent complete.
The first unit of 150MW is scheduled for commissioning in December 2017 while the second unit will come on line by March 2018.
“Civil excavations on the project have been completed for nine audits, underground powerhouse, water intake, transformer platform, emergency gallery, bus bar gallery, head-race tunnels and pen-stocks.
“Installation of a number of electro-mechanical items has been completed. This includes turbine house crane, draft tube elbow and cone, unit 7 stay ring among others,” said Engineer Chifamba.
Other initiatives projects being pursued by Government or private investors to improve the power supply situation in the country include Gairezi Hydro, Deka Pump Upgrade (for supply of water to Hwange Power Station), and re-powering of small thermals in Bulawayo, Munyati and Harare.
Completion of the power projects is expected to plug the power supply energy deficit and ease the rolling power cuts that have weighed down agriculture, manufacturing and mining sectors.