Zesa seeks $128m for Gairezi project

Source: Zesa seeks $128m for Gairezi project | The Herald 28 JAN, 2019

Zesa seeks $128m for Gairezi project

Golden Sibanda Senior Business Reporter
Zesa Holdings is seeking to raise $128 million to finance construction of the 30 Megawatts Gairezi hydro power project, where little progress has been registered since the tender was awarded in 2015.

The power utility has since made an application to the African Export and Import Bank (Afreximbank) for the requisite funding and the regional bank is reportedly evaluating the application.

However, the Gairezi power project may eventually be delivered at a reduced cost after Zesa indicated it had dropped a local partner that jointly won the contract for the project with two Indian firms.

According to Zesa, the contract for Gairezi project was amended last year to exclude the local partner, Intratrek Zimbabwe.

Zesa said it learnt positives from past experience that there were significant benefits to be derived from dealing with the actual equipment suppliers, which cuts middlemen and lowers project costs.

Zesa said construction of the plant will commence once funding has been secured, as President Mnangagwa’s Government is leaving no stone unturned to ensure energy self-sufficiency.

In fact, President Mnangagwa’s State visit to China in April last year, which saw signing of several multi-million mega deals, unlocked the $1,1 billion for the 600MW Hwange expansion  project.

Zimbabwe has made significant strides in dealing with its power deficit, following completion of capacity extension at Kariba South last year and recent start of Hwange 7 and 8 extension.

Peak period demand for power in Zimbabwe (1 600MW) outstrips its internal generation (1 400MW), constrained by old equipment and lack of investment in new generation for over three decades.

Zesa spokesman Fullard Gwasira, said that some of the initial preparatory works for the Gairezi project had been completed and the power utility was now seeking to raise the requisite funding.

This comes after the company dropped the local partner, Intratrek Zimbabwe, which had been jointly awarded the contract for Gairezi with Indian companies Angelique International and Bharat Heavy Equipment Limited.

Mr Gwasira said engaging the Indian equipment supplier and technical partner directly in executing the project will see the State power utility delivering the power station at low cost.

“The contract with the local partner was terminated last year and we are dealing with the supplier directly in line with interest of delivering a least cost project to the people of Zimbabwe.

“Lessons were also learnt from previous experience (on) the benefits of dealing directly with actual supplier,” Mr Gwasira said in e-mailed responses on Thursday.

The Gairezi project has been on the cards from as far back as the early 2000s when the first feasibility study for the project was done by a company called Norconsult and later redone by Indian firm Wapcos.

While not much has been done in terms of actual plant construction, significant ground works have been completed including topographic survey, geo-tech survey, generation licence and environmental impact assessment.

Further, a provisional water permit was renewed on November 11, 2015, while a long-term (5 years) application for renewal of the water permit was sent to the Zimbabwe National Water Authority (ZINWA).

Zimbabwe has been importing power from Mozambique (50MW) and South Africa (300MW), which put a strain on demand for foreign currency.

Government has since issued several independent power producer licences to complement its efforts, including the joint effort with Zambia to develop the 2 400MW Batoka Gorge hydro plant, in  ensuring Zimbabwe builds sufficient capacity to produce power.