via ‘Kariba South Power Station fees to balloon’ – DailyNews Live 21 July 2014 by Kudzai Chawafambira
HARARE – ZESA Holdings (Zesa) says the total cost of completing the expansion of the Kariba South Power Station will balloon to around $539 million from the budgeted $380 million.
The power utility’s chief executive Josh Chifamba (pictured) told the Mines and Energy parliamentary portfolio committee last Monday that the funding that they were getting from China’s Sino Hydro Corporation (SHC) only covers 85 percent of the cost.
“So that $380 million we are talking about, will be 85 percent of the cost of bringing cement, equipment, generators and auxiliary plant among others things.
“The other 15 percent is what we have to raise. When we are doing this and because actually get money from the bank, we should pay interest on the amount we would have borrowed.
“By the time we roll up those costs the total project would have cost more,” he said.
Chifamba added that they had to raise $150 million as equity funds and that the total cost of completing the Kariba expansion project would reach up to $539 million.
“Lenders also want to know that you are taking the risk and putting a skin to it,” he said.
This comes as SHC has already moved construction equipment from Zambia to commence operations on the Zimbabwean side of the Kariba dam wall.
SHC won the tender for the $380 million project, the bulk of which will be funded by Export Import Bank of China under a deal signed with the Zimbabwe government.
Early this year Finance minister Patrick Chinamasa said that the SHC was already in situ at the construction site.
“As you know, this Chinese contractor has just finished constructing Kariba North for the Republic of Zambia and they are just moving across the border to do the same on our side to create an additional 300 megawatts,” said Chinamasa.
On completion, the power station’s output will be boosted to 1050 megawatts (MW) from the current 750MW.
The project is expected to be complete by 2017.
Government secured funding for the project, after signing a $380 million deal with the Chinese multi-lateral financial institution late last year with Zimbabwe Power Company (ZPC) expected to contribute 15 percent of the total cost of the expansion exercise.
At present, ZPC — a subsidiary of power utility Zesa Holdings — is generating between 1 300 and 1 400 MW against a daily national demand of 2 200MW.
This comes as Zimbabwe requires $5,8 billion to finance power generation projects which will increase output to a total of 6600 megawatts.
Government is currently seeking to partner regional power utilities and private investors in new energy projects, as part of efforts to boost its electricity supply.
In 2007, the country partnered Namibia’s NamPower to refurbish Hwange Power Station.
Chifamba noted that of the 150 MW in export to Namibia for the service of a $40 million loan used to rehabilitate Hwange by NamPower, ZPC was left with about 10 months supply to the neighbouring country.
Another long-standing initiative is the Batoka Gorge project for four 200 megawatt power generators in the next six years.
This massive scheme along the Zambezi River is projected to cost $2,2 billion.
Work on Batoka Gorge in terms of bidding stages for a comprehensive environmental and social impact assessment and an engineering feasibility study will be concluded by March next year.
Other proposed projects are the Gairezi hydropower station in Nyanga; an extension of the generation life cycle at Hwange; the upgrading of Deka pipeline; repowering schemes at Harare, Munyati and Bulawayo power stations, and a coal-bed methane project in Matabeleland North.
The country has five power stations, namely Kariba and four thermal power stations — Bulawayo, Harare, Hwange and Munyati.
Kariba is currently generating 37,28 percent, Hwange 28,67 percent, Bulawayo 1,2 percent, Munyati 1,4 percent and Harare 0,4 percent while imports contribute 13,22 percent while 17,69 percent represents the shortfall.