IDBZ raises US$35m for Kariba, Hwange

IDBZ raises US$35m for Kariba, Hwange | The Sunday Mail 10/04/2016

Africa Moyo
THE Infrastructure Development Bank of Zimbabwe has raised US$35 million through the Zimbabwe Power Company bond for refurbishment of Kariba South Power Station and repowering of Hwange Thermal Power Station.
The bank plans to raise US$50 million to spruce up the two power plants.
IDBZ issued a five-year, nine percent fixed coupon bond in November 2014 for Kariba South and Hwange Power Station.
Of the US$50 million to be raised, US$38,8 million will be channelled to Kariba South and US$11,2 million to Hwange Power Station.
IDBZ resource mobilisation executive Mr Willing Zvirevo indicated recently that the outstanding US$15 million would be raised through private placement.
“US$35million (has been) raised to date, leaving a headroom of US$15 million which is available for subscription under private placement. (The) intervention will optimise output from these two existing power stations which will help increase the country’s energy output,” said Mr Zvirevo.
IBDZ has raised more than US$80 million for Zesa subsidiaries in the recent past.
In 2012 the bank raised US$30 million through the three-year, 10 percent Zimbabwe Electricity Transmission and Distribution Company fixed coupon bond for the pre-paid meter projects.
The ZETDC bond was fully subscribed and supported by local and foreign institutional investors. It matured in December last year and paid out in line with the schedule.
In 2014, IDBZ issued a US$15 million five-year, eight percent fixed bond to further support the pre-paid meter project.
Mr Zvirevo noted that raising funds for energy projects was particularly taxing as they often required huge capital outlays and long-term funding in a domestic market biased towards short-term financing.
The country’s alleged high risk perception and absence of a sovereign credit rating limits access to international lenders, while the cost of debt capital is high as financiers price out the claimed risk.
Mr Zvirevo added that the “sub-economic tariff which is not cost reflective and does not offer a reasonable return, over-dependence on single off-taker which can present working capital challenges and (the fact that) tariff review a very protracted process”, also makes it difficult for financiers to fund local energy projects.
IDBZ is a statutory body established through the Infrastructure Development Bank of Zimbabwe Act (Chapter 24:14), and came into being in September 2005 following amendment of the Zimbabwe Development Bank Act.
It is mandated with promoting economic development and growth and to improve the living standards of people through development of infrastructure including housing, amenities and utilities.