Financial Gazette (Harare)
Felix Njini
20 May 2005
Harare — THE Zimbabwe Electricity Supply Authority (ZESA)'s multi-billion-dollar expansion plans are running 18 months behind schedule as Chinese investors demand guarantees for coal concessions in return for capital injection into the projects.
The Chinese are reported to have refused to move until the government gives them the guarantees.
ZESA general manager responsible for corporate affairs Obert Nyatanga said the government had no option but to "dance to the Chinese tune".
"Construction of Hwange and Kariba South power stations is running 18 months behind schedule even though government says it is processing CATIC (National Aero-Aero Technology Import and Export Corporation) requirements," Nyatanga said.
Analysts have warned that the ZESA deal puts the government at risk of mortgaging Zimbabwe's vast coal reserves in return for investment into the critical energy sector.
ZESA, the national power utility which imports a large portion of its electricity from the southern Africa region, needs investments totalling more than US$2 billion to build up its energy capacity before 2007, when regional power suppliers ESKOM of South Africa and HCB of Mozambique are expected to run out of surplus energy to export.
ZESA has to prepare for self-sufficiency by expanding the Hwange and Kariba South power stations.
The power utility has signed investment deals totalling US$3.5 billion with China's CATIC, under which the Sino firm has undertaken to expand Hwange 7 & 8 and Kariba 7 & 8 power stations in return for coal concessions.
Zimbabwe, facing increasing international isolation, has signed a string of investment deals with Chinese firms - ranging from supply of telecommunications equipment to passenger vehicles and military aircraft.
In a related development, Hwange Colliery Company is also enticing Chinese investors to pour in much-needed foreign currency to build power generators in return for coal concessions.
Hwange, the country's sole coal miner with a primary listing on the Zimbabwe Stock Exchange and also listed on the Johannesburg and the London stock exchanges, is close to sealing a deal with China North Industries Corporation (NORINCO). Hwange will barter an undisclosed tonnage of coal and coke in return for mining equipment.
Marketing and investor relations manager John Nkala said the coal miner and NORINCO had agreed "in principle" to supply NORINCO smelters in the populous and mineral-rich Democratic Republic of the Congo (DRC) with coal and coke.
He said NORINCO had agreed to source Komatsu and Caterpillar earthmoving equipment on behalf of Hwange. The deal, according to Nkala, should be sealed before August this year.
"They have agreed to supply us with mining equipment in return for coal, some of which they want to be consumed at their DRC smelter," Nkala said. "The deal provides us with a window of opportunity to equip our mines."
Be the first to Write a Comment!
Copyright © 2005 Financial Gazette. All rights reserved. Distributed by AllAfrica Global Media (allAfrica.com). To contact the copyright holder directly for corrections — or for permission to republish or make other authorized use of this material, click here.
AllAfrica aggregates and indexes content from over 125 African news organizations, plus more than 200 other sources, who are responsible for their own reporting and views. Articles and commentaries that identify allAfrica.com as the publisher are produced or commissioned by AllAfrica.
