Eng Magombo
Business Reporter
The Zimbabwe Energy Regulatory Authority says it will give prospective independent power producers, licensed to plug yawning supply deficits, time to work on their projects, as they required longer periods due to high financial cost. ZERA, a statutory energy industry regulatory entity, chief executive Engineer Gloria Magombo said the authority had licensed 20 producers, but while only nine were operational, more time will be allowed for big projects.
“A lot of money is involved in large projects. That is why you see all the small ones are happening,” she said.
Kariba South (hydro) and Hwange (thermal) are the only big projects generating electricity in the country.
“It is not easy, the bigger the project the more demanding it is. For small projects, the maximum has been two years at most and they are able to start construction but for all big ones it’s a long process,” she added.
While there is increased activity and interest in the power generation sector, Zimbabwe is still facing stifling power deficits, prompting blackouts for hours on end.
Zimbabwe requires about 2 200 megawatts at peak of demand but due to limited generation capacity, is only able to produce an average of 1 300MW, leaving a demand gap of nearly 1 000MW despite an ailing economy.
RioZim’s 1 400MW project in Sengwa, Gokwe North, is one of the hyped proposed large generation projects yet to get underway several years after its approval as the IPP battles to get financiers for the project.
“They have been identifying people but they have been pulling out. There is a lot of interest now, since the elections last year, and we have given them time to regroup.
“If someone wants to give you a billion dollars, they won’t do it in two days; it takes time,” Eng Magombo said.
A coal power project in Lusulu, 312 kilometres north of second capital – Bulawayo – is also yet to take off, but like Sengwa, is undergoing feasibility for bankability before the IPPs seek funding.
Another thermal generation project, in Hwange, is going through an environmental impact assessment. An engineering and procurement contract is being finalised.
China Africa Sunlight Energy has already signed a power purchase agreement with Zesa subsidiary, Zimbabwe Electricity and Distribution Company, for its 600MW thermal project in Gwayi, Matabeleland North Province.
“These are huge projects. Smaller projects are easier to implement because of low capital outlay,” she said.
ZERA has also approved generation capacity expansion proposals for Hwange Thermal and Kariba South Hydro. An IPP licence has also been issued for the Batoka Gorge Hydro power project.
Eng Magombo said there were a lot of things involved before a project is rolled out or gets requisite financial support. These include EIA, feasibility and bankability studies, which also cost a lot of money prior to release of project funding.
Feasibility studies may take up to 18 months. Producers also need to sign off taker and insurance agreements before project funding can be availed.
Eng Magombo said three hydro power stations, with combined output of 9MW were finalising project documents. Further, Gairezi – a 15MW project – is undergoing EIA, geo-technical and hydrological studies.