8 August 2017

Zimbabwe: Sino-Hydro, Zesa Deal Settled

Sino-Hydro has concluded a power purchase agreement with the Zimbabwe Electricity Transmission and Distribution Company for the supply of power from Hwange 7 and 8 units, a critical step towards reaching the financial closure of the $1,1 billion project.

ZETDC managing director Engineer Julian Chinembiri told The Herald Business yesterday that the Zimbabwe Energy Regulatory Authority had approved a tariff of 11c kWh.

Sino-Hydro won the contract to expand Hwange Thermal Power Station, which is expected to increase the capacity of the country's largest power plant by 600 megawatts.

"The power purchase agreement is now in place and this is a very critical step towards reaching financial closure," Eng Chinembiri said in an interview. The power purchase agreement is a bilateral contract between Sino Hydro and the off taker, ZETDC.

Fundraising for the Hwange expansion project is underway, with the Government and ZPC are finalising conditions precedent for the loan drawn down from China Exim Bank.

The ZPC was targeting financial closure for Hwange expansion project by April this year. The funding will enable ZPC to add to 2x300MW units, commonly referred to as Hwange 7 and 8.

State-owned China Export and Import Bank will finance the cost of the engineering, procurement and Construction contract through a Chinese Government backed project loan.

ZPC had initially hoped that it would seal the funding agreement with Sino Hydro by the second half of 2016, but missed the targeted timeline due to unfulfilled conditions precedent.

The Hwange Power Station capacity expansion programme is part of widespread efforts by the Government to narrow the power deficit. The efforts include ongoing expansion of the generation capacity of Kariba also being implemented by Sino Hydro.

The first unit at Kariba power plant is expected to start delivering 150MW onto the grid in December, with additional same amount of power expected three months later from another unit.

Zesa imports power from regional utilities including Hydro Cahorra Bassa and Eskom of South Africa to cover local supply gaps due to limited capacity. Zimbabwe requires an average of 1 400 megawatts against an average generation of 1 000MW.

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