Africa’s largest man-made inland lake, Kariba Dam situated along the mighty Zambezi River between Zimbabwe and Zambia is again on the mend following realisation by the Southern African Development Community (Sadc) region of its importance following the dwindling of desperately required energy to stimulate economic growth.
If efforts by the Sadc regional bloc together with private sector pull their resources together to ensure the dam has been renovated to its full capacity, an estimated 3 000 megawatts of electricity will be produced to supply electricity to host neighbouring countries Zambia and Zimbabwe while fellow Sadc member states such as Botswana, Namibia and Africa’s most developed nation – South Africa also stand to benefit.
However, the dam was under utilised for almost two decades following the discovery of cracks on its dam wall, a negative development widely believed to be posing huge danger to millions of lives down the river along Mozambique where it flows into the Indian ocean in the event the dam wall collapses.
As a result, the engineers had recommended the giant lake should not be allowed to store water to its full capacity, sidelining the region of both power and water for agriculture including fishing of popular kapenta fish.
Presently the colossal dam is operating below par where it is generating an average of 1 626 megawatts of electricity being shared between Zambia and Zimbabwe while a small portion of the power goes to Namibia through NamPower.
Namibian government, which is also benefiting from the giant dam has committed some funding to ensure the Zimbabwe dam project becomes a success story.
Not to be left out is South Africa’s financial institution, Standard Bank together with the Eastern and Southern African Trade and Development Bank (PTA Bank), who injected a whopping US$120 million (about R1,6 billion) to ensure the giant dam’s energy potential is realised.
When completed the giant dam is expected to produce more than 3 000MW of electricity, enough to sustain Zimbabwe’s comatose economy and that of Zambia while boosting energy reserves for other Sadc regional member states.
Only this week the Zimbabwe Power Company (ZPC) was given a whopping US$120 million by Namibia to rehabilitate existing power infrastructure at both Kariba South Hydro Power Station and Hwange Thermal Power Station.
The funding made through Standard Bank in conjunction with the Eastern and Southern African Trade and Development Bank (PTA Bank) made the announcement to deliver the financing of the giant dam.
The transaction was a continuation of a previous funding arrangement with ZPC, which went towards their contribution into the 300MW expansion at Kariba South Hydro Power Station.
“This funding will assist in improving access to power for Zimbabwe and Namibia, and in the medium to long term, benefits of improved power supply and reliability will also extend to other Southern African Power Pool (SAPP) members.”
“The proceeds will be applied to significant capital expenditure which will increase capacity and improve efficiency of the power stations,” says Tandiwe Njobe, Regional Head: Investment Banking, at Standard Bank.
“Without reliable access to power, industry and economic growth are negatively impacted,” she says.
While raising finance remains a challenge in sub-Saharan Africa, this deal speaks to Standard Bank’s ongoing commitment to use its on-the-ground presence and expert capabilities across Africa to finance the development of power and infrastructure projects throughout the continent.
Standard Bank’s local presence and its strong relationships with key stakeholders in the region were crucial to ensuring the positive outcome.
“This is a landmark transaction in which we could leverage our sector and technical expertise in both markets, as well as our understanding of the regional power dynamics and local regulatory environments, to deliver value to ZPC and Namibia Power Corporation, (NamPower).
“To make this transaction work we engaged with four regulatory bodies and key policy makers in four ministries in Namibia and Zimbabwe,” said Njobe.
The facility is cross border, placing reliance for repayment on a long-term Power Purchase Agreement (PPA) between ZPC and NamPower.
ZPC has a long track record of delivering power to NamPower.
The PPA provides a long term and sustainable cash flow stream to ZPC, enabling the entity to raise further funding for new projects and now for the rehabilitation of existing infrastructure.
Standard Bank has a long-standing relationship with ZPC as their primary banker, and with NamPower, which ultimately benefited all parties to the transaction.
“It was important for us to support the regional power sector through this loan facility.”
“The facility is significant in its contribution to increasing power generation in a region which has an on-going deficit and a clear need for dependable and sustainable power supply,” says Ms Njobe.
Source: The Herald