via All set for Kariba South expansion | The Herald August 7, 2014
Work on the expansion of Kariba South Hydro Power Station will begin next month following fulfilment of all conditions precedent to the project. A ground breaking event for beginning of construction work has been set for September 4, according to an official who spoke on condition of anonymity.
Chinese firm Sino Hydro won the contract to expand the country’s second largest power station by 300 megawatts at a cost of $319 million.
Major conditions precedent to the commencement of expansion work included the formation of a special purpose vehicle responsible for the project, depositing a $17,2 million Government contribution, transfer of assets of the power station to the SPV and signing of a power purchase agreement.
“These were the major preconditions that needed to be fulfilled. They have all been met,” said the official.
“The ground breaking will be on September 4, and this will mark the official start of construction work,” he said.
The SPV will house all the assets of the Kariba South power station, critical for guaranteeing project revenue for the loan facility Sino Hydro facilitated.
The deal also required Government to make a 15 percent capital contribution to the total project cost and transfer of the power stations assets to the SPV.
Further, a power purchase agreement was supposed to be signed between Sino Hydro and the Zimbabwe Electricity Transmission and Distribution Company to guarantee a market for the power from the project.
Energy and Power Development Minister Dzikamai Mavhaire would not comment yesterday saying that he was attending to some other critical business. Comment could also not be obtained from power utility, Zesa Holdings.
Zimbabwe is facing serious power deficits, which have spawned frequent power cuts to industrial, commercial and domestic consumers.
Major users of electricity such as mining giants Zimplats, Mimosa and Unki say Zimbabwe will need to expand its internal power generation to support investment into planned beneficiation and value addition projects.
Zimbabwe last made a major investment into expansion of its power generation in 1987 when it commissioned unit 5 and 6 of Hwange Thermal Station. The expansion is expected to add 600 megawatts to the country’s national power grid.
Sino Hydro has also been awarded the contract to expand Hwange Thermal Power Station after another Chinese company, China Machinery and Engineering Company failed to raise the requisite funding.
The country has over the past decade and half been resorting to power rationing and importing from neighbouring countries to bridge the gap between its generating capacity and demand during peak and off peak periods.