Golden Sibanda Senior Business Reporter
Zimbabwe Stock Exchange (ZSE) listed RioZim says construction of its 2 800 megawatts Sengwa power project will commence in the next 12 months after the mining group signed an exclusivity agreement with Chinese firm, Power China.
The project, which has been on the books since the early 1990s and could not get off the ground due to lack of investment, comes as Zimbabwe is battling choking power crisis due to a mismatch in demand and supply.
Zimbabwe requires 1 700MW at peak periods of demand, but only affords limited production of 1000MW when producing optimally.
This is due to reduced output at Kariba South, which is facing water issues due to the drought experienced last year, and Hwange, which frequently breaks down due to antiquated equipment.
Government has issued more than 40 independent power producers (IPP) licences to complement its efforts towards ramping up internal power production for energy self-sufficiency, but none among the major ones have reached implementation.
A fortnight ago, Energy and Power Development Minister Fortune Chasi said Government had little option but to revoke licences issued to IPPs that have registered little progress in developing their projects despite having been licensed many year ago.
Group chairman Lovemore Chihota said in an annual report that RioZim had signed a binding exclusivity agreement with a renowned international company, Power China, in respect of Sengwa, to pave way for the start of construction work in the near future.
RioZim had short-listed six prospective investors, among them Power China and US electrical systems giant General Electric (GE), for the project before making the final decision to go with the Chinese firm.
“The group made strides in the Sengwa Power Station project, which entails the development of a 2 800MW power station in phases of 700 MW each.
“As the project gained significant traction during the year under review, the company has now set ambitious targets for 2019 which will culminate in the project kick off in the next twelve months,” Mr Chihota said.
Power China is a State owned sister company of Sinohydro, which successfully undertook expansion work on Kariba South extension project to add 300MW, on previous rated capacity of 750MW.
An exclusivity agreement (lock-out, shut-out or no-shop agreement) is designed to ensure that all parties to a prospective deal negotiate with a single party for a specific period.
The prospective Chinese contractor is already on site at Sengwa, Gokwe North, conducting initial evaluations, which precede financial closure.
The Sengwa project will be done in four equal phases of 700MW plant until the full project output target of 2 800MW has been completed.
Power China is already on the ground doing a bill of quantities on the water pipeline and power lines; essentially, the company is updating details on two major issues, as required by financiers.
“(Chinaeximbank) wanted to know the cost of the water pipeline from Kariba to Sengwa, so they are currently costing out that, then the cost of evacuation lines from Sengwa to Sherwood,” said a well placed company source who requested anonymity.
The financiers have also requested the mining group, which has interest in gold mining at Renco (Masvingo), Cam and Motor (Kadoma) and Dalny (Chegutu), to draw estimates for construction of a town in Sengwa, where workers at the plant will stay.
Upon completion, Sengwa power project will be among Zimbabwe’s two biggest power plants, including the 2 400 MW Batoka project that is being jointly pursued by Zambia and Zimbabwe.
Further, the envisaged thermal power project will get coal from the group’s vast coal resource claims in Gokwe North, which are understood to hold more than 1,3 billion of the precious fossil fuel.