Zesa raises power generation capital

HARARE - National power utility, Zesa Holdings (Zesa), said it anticipates to have raised its share of the $1,4 billion Hwange Power project by first quarter next year.

This was after the parastatal last week got a parliamentary approval for a $1 billion loan facility from the China Export-Import Bank (China Exim Bank).

Zesa chief executive, Josh Chifamba, on Tuesday told businessdaily that Zimbabwe Power Company (ZPC) was in the process of mobilising the $307 million it is supposed to contribute to the expansion of Hwange 7 and 8 thermal power stations and ancillary structures.

The expansion project will provide an additional 600 Megawatts (MW) of power to the national grid, in addition to 920 MW, giving a cumulative figure of 1 520 MW as the country’s output.

“We are very close to raising the money… yes, it is our hope that by end of the first quarter we will have the funds safely in place,” Chifamba said over a telephone interview.

Last week, Finance minister, Patrick Chinamasa, published the loan facility in the government gazette, saying the loan from the Asian bank had a 20 year repayment period with a grace period of seven years at an interest rate of two percent per annum.

The loan has also a commitment fee of 0,25 percent per annum on the undrawn amount and management fee of the same percentage.

However, Chifamba could not be brought to reveal the source of the funding for ZPC’s share in the project expected to cover the project development costs.

“… Well, of course, I cannot tell you the channel of funding or where we are getting the money,” he said.

The cost for implementing this project is $1,48 billion of which, $1,147 billion is the contract price.

Of the contract price, 85 percent amounting to $997,7 million has been secured through the preferential buyer credit loan agreement concluded with China Exim Bank. In turn, China Exim Bank has requested the contractor, Sino-Hydro Corporation, to inject $176 million representing 15 percent of the contract price as equity into the project.

The loan from China Exim Bank is $997,7 million with the project set to be implemented by Sino-Hydro Corporation Limited of China as the contractor.

According to Chinamasa, a special purpose vehicle –Hwange Electricity Supply Company (HesCo) –has been created for purposes of overseeing the project development. The company will be a joint venture company between ZPC and China’s Sino-Hydro Corporation.

“In terms of an on-lending agreement, HesCo  will assume responsibility for repayment of the principal loan and interest from the proceeds of electricity sales with the project set to be implemented over a period of three and half years,” Chinamasa said last week.

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