13 November 2013, Harare – The Zimbabwean government and the China Export and Import Bank have signed a US$319 million loan agreement for the expansion of Kariba South hydro power project. Finance Minister Patrick Chinamasa signed on behalf of the Government, while China Exim Bank vice president Mr Zhu Hongjie represented the bank.
“Under this arrangement, the bank will provide funding amounting to US$319,5 million — representing 90 percent of the total project cost — while Government, through the Zimbabwe Power Company will finance the 10 percent balance amounting to US$35.4 million,” Minister Chinamasa said.
The project is expected to add 300 megawatts to the national grid, a development set to ease power outages.
Zimbabwe’s electricity generation capacity is about 1 200MW against a peak demand of over 2 200MW.
“As you are aware, Mr vice president (Mr Zhu), the whole Sadc region is currently facing energy shortages. For Zimbabwe, this has hamstrung efforts to revive our under-performing economy.
“You will, therefore, agree with me, Mr vice president that energy is a key enabler in any economy. Without reliable energy supplies, our economic turnaround efforts will not bear fruit,” said Minister Chinamasa.
The loan would 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 would add 300 megawatts to the national grid.
Speaking through an interpreter, Mr Zhu said the signing of the loan agreement signified a major breakthrough in addressing power shortages in the country.
“Sino-Hydro is one of the top 500 companies in China.
“It’s a very competitive and strong company in China. It is also a good quality client of China Exim Bank.
“We strongly believe that this company will be able to complete the project on time and with good quality. We also hope that it will accelerate its construction to ensure that this project will be completed as early as possible to bring benefit to your people,” Mr Zhu said.
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 China Exim Bank 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 fun-ding.
– The Herald