Zesa negotiates export deal

Source: Zesa negotiates export deal | The Herald November 2, 2016

Business Reporter

ZESA Holdings is negotiating for an electricity export deal with Botswana Power Company to raise part of the money for rehabilitation of Hwange Thermal Power Station.The power utility intends to raise $120 million through a four-year power export deal to be signed in the first quarter of 2017, people with knowledge of the matter said.

The exports would amount to around 5,5 percent of the present maximum potential capacity of Hwange.

Zesa contracted China’s Sino-Hydro to expand generation capacity at Hwange, the country’s largest power plant at a cost of $1,2 billion.

“The $120 million is supposed to be part of our equity injection into the project,” said one source who requested not to be named.

“So to unlock the $1,1 billion, we intend to export 50MW to Botswana to raise our contribution. While we do not have the capacity to export power given our limited generation capacity, this is one of the viable options that we considered to raise funds for the project.”

Previously, Zesa entered into a similar arrangement with Namibia when its power utility NamPower advanced $44 million for the rehabilitation of Hwange plant. Zesa repaid the debt through exporting power to Namibia and the loan was paid off in January last year.

No comment could be immediately obtained from Zesa at the time of going to print yesterday.

The expansion of Hwange would see Sinohydro adding 600 MW of generation at the plant. Sinohydro was also contracted to expand Kariba Power Station to add 300MW. Zimbabwe produces an average of 1 100MW against peak demand of 1 400 MW. To meet the shortfall, the country is importing up to 350MW from South Africa and Mozambique.

During the third quarter, Zesa missed output target by 9 percent largely due to cash flow challenges and forced outages at Hwange plant. Zesa produced 1 758,24GWh against a target of 1 935,10GWh. The power utility also experienced delayed return to service of Turbo-Alternator number 1 at Harare power station, which was anticipated to be back in service by April 2016.

Despite missing the target, power supplies have remained stable. Since the beginning of the year, the importation programme, coupled with other initiatives to boost generation of electricity helped Zesa to meet domestic demand. Prior to that, Zesa was forced to ration power supplies, with households and businesses, including mining houses sometimes enduring long periods of load shedding.

In an update of the expansion projects, Zesa said the Kariba South Extension is now 58 percent complete and within the schedule. The first unit expected to some on line in December next year. The power utility said the Sinohydro representatives were in the country recently finalising all agreements required for financial closure for the Hwange expansion project.