11 November 2013, Harare – Expansion work at Zimbabwe’s Kariba South Hydro Power is expected to start this week, amid indications that government and officials from China Export and Import Bank will today (Monday) sign a US$320 million funding agreement for the project.
A delegation led by China Exim Bank vice president, Mr Zhu Hongjie was expected to arrive in the country Sunday to seal the deal.
The project will cost about US$355 million, with Government supplementing 10 percent which is about US$35 million.
All things being equal, the development puts in motion Government’s commitment to reducing the widening gap between electricity demand and supply in the country at least by 2017.
The loan will be used for such services as engineering, procurement of equipment and actual construction to be done by the winning bidder – a Chinese firm called Sino-Hydro. The firm has an option of sub-constructing building of the two units that will add 300 megawatts to the national grid.
“Yes, China Exim Bank number two (Mr Zhu) is coming to sign loan agreement for Kariba South expansion,” confirmed Finance Minister Patrick Chinamasa yesterday.
Zimbabwe Power Company – a subsidiary of Zesa Holdings, last year signed the agreement for the project with Sino-Hydro, an engineering, procurement and construction company.
But a debt of over US$25 million owed to Sino-Hydro by the Industrial Development Corporation and Farmers World Holdings stalled conclusion of the funding agreement as the two firms were supposed to clear the debt first before new funding.
“That debt was settled. That is the reason why there is progress now in terms of funding for Kariba South expansion,” said a source.
“Treasury applied for a loan agreement with the China Exim Bank in June this year and the application was approved last month. It is the first time that a loan application has been approved by that bank this quick.
“It usually takes a year to approve loan applications, especially for projects on this part of the world. The reason could be that the bank has worked with Sino-Hydro for a long time because as the contractor they were also pushing for the approval of the loan.”
ZPC managing director Mr Noah Gwariro told The Herald at the weekend that signing of the funding agreement would pave way for actual work to begin.
– The Herald