The Zimbabwe Power Company (ZPC), a power generation unit owned by ZESA Holdings, has injected US$50 million into Kariba South Hydropower Station towards ongoing and new capital projects to boost power generation, the Financial Gazette’s Companies & Markets can reveal.
The plant’s general manager, Kenneth Maswera, disclosed that the capital projects include the replacement of switchgears, upgrading of the control room, refurbishment of the lift shaft, ventilation systems and pipe works, stator core retensioning, replacement of GT, and refurbishment of cranes.
“Our request for US$48 million for our capex (capital expenditure) this year has been approved,” said Maswera on the sidelines of a media tour of the power plant last week.
“We have already completed the replacement of auxiliary transformers, the modernisation of the governor and the replacement of GTs.”
Maswera said this year’s spending plans demonstrated the company’s commitment towards projects essential in the production of electricity at Kariba Power Station which has, for close to 60 years, been producing relatively cheap and reliable electricity for the country at US$0,02 per kilowatt hour (kWh).
Electricity from thermal power stations at Hwange, Munyati, Bulawayo and Harare costs between US$0,06 and US$0,08 per kWh to produce.
Kariba South Power Station has also for the years remained Zimbabwe’s biggest generator of electricity and is currently being expanded to add 300 megawatts (MW) to the national grid by 2018.
However, the power station is currently generating an average of about 285MW against installed capacity of 750MW due to reduced water supplies caused by poor rainfall which affected Kariba Dam’s water levels.
Maswera said refurbishment of Kariba and other power stations was critical to boost internal power generation.
Zimbabwe faces a critical shortage of electricity due to lower local generation capacity.
The country currently generates an average of about 1000 MW and this has been unable to meet a national demand of about 1600MW.
To cover for the shortfall, the power utility is importing electricity from Mozambique’s Hydro Cahora Basa (HCB) and Eskom of South Africa at a cost of around US$0,15 per kWh.
Relying on imports has left Zimbabwe in a precarious position because the arrangement with Eskom is not on a firm contract basis, meaning that Eskom can only supply electricity to Zimbabwe if they have a surplus.
Depending on availability, Eskom supplies Zimbabwe with up to 300MW, while HCB supplies 100MW on a firm arrangement.
Government has also controversially awarded Sakunda Holdings the tender to construct a 200 MW emergency diesel power plant at Dema substation in Seke communal lands.
By the end of next month, the power utility will be forced to purchase electricity from the Dema Diesel Plant at US$0,15 per kWh.
But this is not cheap electricity for a struggling power utility which is saddled with debts of over US$1 billion, given that currently, the tariff to consumers is pegged on average at US$0,0986 per kWh, which is insufficient to support power projects currently underway.
“We need to move from such an insecure position where we are importing,” Maswera said, “But we are moving to enhance internal generation of electricity by sweating the existing power stations. This is a key strategy.”
Partson Mbiriri, the permanent secretary in the Ministry of Energy and Power Development, defended the Dema project, saying: “It’s significant and important because ZESA is responding to the situation. The attractiveness of this project is that it’s a short-term project say for the next three years as our projects (such as Kariba South and Hwange Power Station expansion projects) mature and we will be benefiting from this.”
Mbiriri said since the diesel power plant was producing electricity at a huge cost, ZESA could sell the electricity at a lower cost since this would be blended with electricity from other cheaper sources.
Apart from the Kariba South Power Station, the power utility is planning to refurbish its four thermal power stations.
The Indian government has promised US$87 million to retool Bulawayo Power Station, but this 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.
The tender to re-furbish the Harare Power Plant was awarded to Indian contractor, Jaguar Overseas, but there are lingering doubts over the project.
Although, Jaguar Overseas won the right to undertake the project two years ago, they have failed to secure funding for the project.
Last month, the Financial Gazette reported that the Indian Export-Import Bank rejected the request to guarantee the required US$70 million financial backing.
Now, Jaguar Overseas has turned to Cairo-headquartered trade finance institution, the African Export-Import Bank for funding.
Surprisingly, Jaguar Overseas, which has struggled to secure funding for the Harare Power Station project, has also been awarded the engineering, procurement and construction contract to re-tool Munyati Power Station.