Sakunda's 850 MW power ambition

HARARE - Sakunda Holdings (Sakunda)’s diesel-fired Dema plant is part of a raft of projects – totalling 850 megawatts (MW) – anticipated by the company countrywide, it has been learnt.

The development not only comes as the Zimbabwean firm has morphed into a fully-integrated energy supplier, but has grown to be the biggest fuel trader with stocks in excess of 200 million litres.

While Sakunda has taken some flak over its developmental costs and power pricing to the Zimbabwe Power Company (ZPC) – believed to $194 million, and 18,06 cents per kilometre hour (kWh) – it has emerged that the 200 MW project will be delivered at $83 million and its approved tariff is )$0,15 kWh.

“The total energy to be supplied from Dema is 536 (gigawatts per hour)… Savings will actually be achieved… as part of the power cost is internalised to the Zimbabwean economy as opposed to importing from any of the external sources as all the benefit is accrued in the generating countries..,” read a position paper in response to the distortions around its southern Harare project, adding the $194 million construction and $0,18/kWh rates were actually attributable to the previous bidder APR Holdings’ projections.

Crucially, the independent report says the Zimbabwe Electricity Transmission and Distribution Company (ZETDC) does not have to prepay for any power from the project and all electricity has a 45-day post-pay period, and whereas imported power is pre-paid.

“The power from the Dema project is fed directly into the grid. This is opposed to imported power that generally results in 15 percent losses in power due to transmission losses. This means that if the effective losses from imported power are factored in, the power from Eskom would cost more than $0,0155/kWh,” it said.

With the emergency fossil fuels plant being undertaken in conjunction with Aggreko Plc – a $17 billion and Scotland-based temporary-power behemoth – experts say its electricity output and pricing is also lower than the ZPC’s other projects such as solar plants at $0,18/kWh.

Earlier, the Zimbabwe Energy Regulatory Authority (Zera) had not reiterated that the power purchase agreement between Sakunda and Julian Chinembiri’s ZETDC was for 100 MW, but Kuda Tagwirei’s company was free to export power.

“The approved tariff will only apply… for the supply of 100 MW of power. Supply to selected customers or exports outside the agreement with ZETDC will be subject to agreed tariffs with the parties involved,” Gloria Magombo, the regulatory body’s chief executive, said in a June 3, 2016 letter.

As the position paper also states that the billable power from Dema will be $7 million – and not $16 million as widely speculated in other quarters – people familiar with the private-public sector partnership project say about 80 percent of the funds will be retained locally, and at a time Zesa Holdings had not invested anything into the venture.

At a time many of the ZPC’s current power generating assets such as Hwange were facing quite a number of problems – and where only four its units are operating – one of the major benefits of the emergency power plant was that its power could kick into the national grid within 30 minutes in the event of a total collapse of supply, experts say.

And should the need arise, Sakunda can also avail the other 100 MW it is permitted to export for the domestic market.

According to sources, the 850 MW of power would be delivered through a variety of sources such as solar and mini-hydro stations, and observers say Tagwirei’s Dema project not only added to his other initiatives to help government, but was a clear sign of confidence in the Zimbabwean economy.

Meanwhile, the company continues to encounter some challenges in its endeavour to deliver the project by end-June.

Even, though, its 85-strong contingent of heavy trucks laden with equipment and generators had been transferred to Harare, they are still stuck or unloaded pending the Zimbabwe Revenue Authority’s inspections.

This is despite assurances of help and government intervention by Cabinet secretary Misheck Sibanda late last month.

Comments (5)

My fellow countrymen perish because of the folly of our incompetent leaders. There is nothing to celebrate about putting on line diesel generators to supply power to the national grid. It is extremely expensive and unsustainable in the long run. Expensive to the consumer as much as it is for the provider. I can assure you that in 5 years time these silly will have shut down. As any competent electrical engineer

mchiko - 9 June 2016

agrekko plants are emergency short term power intervention plants mr competent electrical engineer check their website...

observer - 9 June 2016

Dear observer you seem not to have understood the story above and the reasons why these plants are being up up. Indeed their function should ordinarily be to provide emergency power supply. This is not the case with whats happening in Zim. They are being commissioned to continually supply ZESA power ie run 24/7 and 365 days a year. This is the reason why ZESA is looking to increase tariffs to cover the cost these companies will be settling the power. Checking details on the internet as you suggest is not substitute to being an expert in the field. Anyway As i said they will all not be running a short 5 years down the line. You really do not need a rocket scientist to predict such an inevitable outcome. Thanks your sir

mchiko - 9 June 2016

@mchiko: I agree with you although my "professional" estimate of the commercial life-span of this plant is closer to three more !

Truth Said - 10 June 2016

The immense benefits of this noble project are quite visible. In addition 80% of revenue will be retained to boost our local economy. Lets appreciate the merits of this project.

cliff - 11 June 2016

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