Minister Chinamasa
Tawanda Musarurwa Business Reporter
The Kariba South extension project has the capacity to service its own loan and such a model will be used on future energy projects, an official has said.
The implementation of the Kariba South extension project is expected to cost a total of $533 million, $320 million of which is an extended loan from the Chinese government, while the balance is being provided by the Zimbabwe Power Company borrowing from development finance institutions.
The Kariba South Extension project is expected at add an additional 300 megawatts to the national grid.
Finance Minister Patrick Chinamasa told business leaders at The Herald Business breakfast that electricity receipts generated from the Kariba South will go exclusively towards repaying the loans.
“The power generation project (at Kariba South) has internal capacity to pay off itself. In order to make it attractive we have agreed a payment plan and this not going to happen just in Kariba South extension.
“And the payment plan is the Kariba South extension, which is created by the loan from China Exim Bank, we hurried it off from Zesa into a special purpose vehicle (SPV) which we have already done.
When the project is completed and the electricity is sold into the national grid, the electricity receipts are then deposited into a special account in the name of that SPV to service the loan. He added that a similar model would be used for the Hwange 7 and 8 project.
“And that is the payment plan that we are going to invoke for Hwange thermal 7 and 8, which has the potential to generate 600 megawatts into the national grid. But the Hwange thermal 7 and 8 has had to be re-tendered, according to the minister.
“Hwange thermal 7 and 8 after the awarding of a tender to a Chinese company there was a problem and the project had to be re-tendered to another company which we think has the capacity to carry out the project. This is a $1,2 billion project,” he said.
It is expected that when these projects come on stream Zimbabwe is expected to be self-sufficient in electricity. But much more will be required in the future when the economy starts growing sustainably.
“When we have a deficit of 1 000MW now it’s not real, because when the growth starts kicking we will realise how bad the situation is, because if we are having load-shedding in a situation of depressed demand, then how bad will the situation be when demand starts to pick up,” said Minister Chinamasa.