Power deal faces collapse
AN Indian firm, Jaguar Overseas, the winning bidder for the Harare Power Station re-powering project, has failed to secure funding for the project, the Financial Gazette’s Companies & Markets (C&M) can reveal.
The development comes a few months after Jaguar was also awarded the tender to re-power Munyati Power Station.
Jaguar was awarded the tender to re-power Munyati Power Station in conjunction with its local partner, Intratrek Zimbabwe, which is owned by Wicknell Chivhayo.
The project at Munyati will see the replacement of 15 existing boilers, overhaul of cooling towers and water treatment plant, refurbishment of two 50 megawatts (MW) steam turbines and carrying out civil works.
Munyati Power Station is currently generating about 20MW on average, but would have its electricity generation capacity restored to 100MW.
Jaguar Overseas was in 2014 awarded the engineering, procurement and construction tender for the Harare Power station by the State Procurement Board but has been unable to get funding to the tune of US$70,2 million for the project from the Export-Import Bank (Eximbank) of India, which they had been courting for the past two years.
The bank had continuously asked for more information, a situation that appeared to suggest that the institution was not interested in funding the project that entails replacing the old plant with a modern one with more capacity and improved efficiency.
Two weeks ago, C&M had reported that the deal was hanging in the balance because Eximbank was reluctant to give the financial backing.
Now, we can report that the bank has rejected the proposal to fund the project.
Sources this week told C&M that the development had forced government to contemplate cancelling the tender.
To save the deal, Jaguar has now initiated talks with African Export-Import Bank (Afreximbank), which has been disbursing an average of US$500 million per annum to Zimbabwe through various financing facilities.
Permanent secretary in the Ministry of Energy and Power Development, Partson Mbiriri, confirmed the development.
“Jaguar Overseas is now talking to Afreximbank to financially support the Harare Power Station project,” Mbiriri told C&M on the sidelines of a ZESA Holdings function in the capital.
“This came about after the Eximbank of India told them that they were longer able to support the project.”
The re-powering project is expected to result in the replacement of the current boiler technology with a circulated fluidised bed, which is more efficient and cost effective.
This would increase the plant’s generation capacity to 120MW, from the current 30MW.
Government secured US$87 million from the government of India to re-power Bulawayo Power Station as part of measures to secure power supplies for the economy.
The loan will be repaid in 13 years at an interest rate of two percent per annum.
But the refurbishment of the 120MW Bulawayo Power Station, which should have commenced early this year, has been deferred to later this year after parties to the transaction agreed to float a tender for the project in India, instead of Zimbabwe.
Zimbabwe faces a critical power shortage with generation averaging just below 1 000MW. This has been unable to meet the country’s demand of about 1 600MW.
To cover for the shortfall, ZESA Holdings is importing about 300MW of electricity from Eskom of South Africa and 100MW from Hydro Cahora Bassa of Mozambique.
However, government, through Zimbabwe Power Company — a unit of ZESA Holdings — is working to close the electricity supply gap in the country through expansion projects at Kariba South Hydro Power Station and Hwange Thermal Power Station.
A Chinese contractor, Sino Hydro Corporation, is undertaking expansion work at Kariba Hydro Power Station, which is expected to add 300MW to the country’s existing power generation capacity.
The expansion work at Kariba Hydro Power Station is expected to be complete by 2018 after the government and China Eximbank signed a US$355 million loan agreement for the expansion of the plant.
Expansion of Hwange Thermal Power Station, the largest coal-fired power station in the country, will also be undertaken by Sino Hydro Corporation.
The expansion will see the thermal power station adding two more units with a combined generation capacity of 600MW.
Zimbabwe is also pursuing other projects to harness power from solar and the US$4,5 billion Batoka Gorge project along the Zambezi River, some 54 kilometres downstream of Victoria Falls.
The multi-billion dollar hydro power project, which is being spearheaded by the Zambezi River Authority, a company owned by the Zimbabwean and Zambian governments, is expected to generate 2 400MW of electricity to be shared equally by the two countries. email@example.com
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