Harare - Zimbabwe has concluded a $1.4bn agreement with the Export–Import Bank of China (Exim Bank) to expand power generation and help alleviate the country's perennial electricity shortages.
According to a statement by Victor Utedzi, who is a director at African Transmission Corporation and has been involved with the project, the billion dollar deal is for the construction of a 600 megawatt coal-fired power plant.
“I'm thrilled to announce that today we closed on the $1.4bn 600MW Hwange coal-fired expansion project,” said Utedzi in a statement seen by Fin24 on Thursday.
Zimbabwean President Emmerson Mnangagwa has since confirmed the signing of the deal, saying at a political rally on Thursday that the country has begun the $1bn Hwange power station extension drawdown from Exim Bank.
Commenting on the development, Norton Rose Fulbright partner Steven Gamble, who has worked on the project, said this is arguably the biggest public-private partnership project in Zimbabwe.
“This is one of the biggest PPP projects outside South Africa, and the good thing about it is that China's Sinohydro Corporation (owned by the state and the world’s largest hydropower construction company) will have a 36% minority stake in the project, which means it will account for its work.
“The Zimbabwean government also has the right to buy out Sinohydro if need be,” said Gamble, whose company provided legal advice to the parties, including negotiating and structuring all the contracts used in this project.
4 000 new jobs during construction
Utedzi said: “The transaction has been a long time in the making - since the beginning of 2011. This crucial project will help ease some of the power constraints in Zimbabwe and create upwards of 4 000 direct jobs during construction.
“In the long term, we anticipate many more positive spin-offs for the Zimbabwean economy,” he said.
Utedzi said the project, which will be completed in the next three-and-a-half years, will modernise Zimbabwe’s portfolio of power generation assets, using the latest clean-coal technology.
“Once fully operational, the power plant will have a 30% share of the country’s generation mix,” Utedzi said.
Zimbabwe currently generates power from hydro, coal and to a lesser extent solar. The demand for power in Zimbabwe stands at 1 600MW at peak periods, against internal generation capacity of about 1 400MW.
Power generation has however been below capacity for years as some of the plants, particularly the thermal ones, are reaching their sell-by date.
According to Utedzi, the funding package includes a $1bn loan from Exim Bank and strong support and partnership from the Sinohydro Corporation, Norton Rose Fulbright of South Africa and Standard Bank among others.