Zim firm in $1bn power deal

HARARE - Zimbabwe's Pan-African Energy Resource (PER) Lusulu Power has signed a $1,1 billion deal with a Chinese company for the construction of a 600 Megawatt (MW) coal-fired power plant in the country’s north-western region to ease power shortages.

PER Lusulu Power chairman, Stuart Perry, told journalists on Thursday that the China State Construction Engineering Corporation (CSCEC) had agreed to inject capital into the project.

“We are going to do 600 MW in the first phase with a total output of 2 000 MW set to be produced ultimately. The Chinese financial institution will avail a $1,1 billion funding for the project,” he said.

Perry added that the project was also subject to the company signing a power purchase agreement with the State energy regulator, the Zimbabwe Energy Regulatory Authority (Zera).

According to PER Lusulu, the first phase of the project includes the initial infrastructure work such as road construction and the establishment of transmission lines. This phase is scheduled for completion in the first half of 2019.

CSCEC will design and construct the plant, as well as build power lines to transmit the electricity and expects to complete the project in 2019.

The Independent Power Producers (IPP )recently asked Zera to have its licence amended after failing to initiate its proposed project within the set timelines.

PER Lusulu Power was granted a generation licence in October 2010, with one of the key conditions of being given the licence being that the IPP should have commenced work on the site within one year of receiving the licence.

But since the issuance of the licence in the last quarter of 2010, the coal fired power plant is yet to get off the ground.

Finance minister, Patrick Chinamasa, said the deal would go a long way in addressing the infrastructure gap in power generation in the country.

“The project is very important for the development of Binga as there will be huge infrastructure development in and around the plant, we hope that the completion of the power project will not only boost availability of power in the country but result in a reduction in power tariffs,” the Treasury chief said.

The power project — to be located in Binga — will use surrounding coal concessions to fire the power plant and will feed its power onto the national grid with surplus being exported.

Zimbabwe has faced perennial power shortages for over a decade owing to antiquated power plants.

The country currently produces 1 100 MW against demand of 2 200 MW and sometimes plugs the shortfall through imports from the region.

Last year, Zimbabwe contracted a Chinese firm, Sino-Hydro to expand its second largest power plant, Kariba Power Station by 300 MW. The project is set for completion in 2017.

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