Zesa drops Sino Hydro deal
http://www.theindependent.co.zw/
Thursday, 17 November 2011 19:03
Paidamoyo Muzulu
ZESA has renounced the Memorandum of Understanding (MoU) clandestinely
signed between treasury and Chinese conglomerate Sino Hydro for the
expansion of the Kariba South hydroelectric power project opting for a more
transparent tender process. Kariba presently generates 750 megawatts of
power at its peak and the MoU seeks to increase generation capacity by an
extra 600 MW. It was signed by Finance minister Tendai Biti and Economic
Planning and Development minister Tapiwa Mashakada early this year.
Investment in the country has been subdued in the last decade with Zesa
failing to provide uninterrupted power supply to the manufacturing industry.
The power authority sometimes switches off consumers for up to 12 hours as
part of its haphazard load-shedding schedule.
Zesa chief executive officer Josh Chifamba told the Mines and Energy
Portfolio Committee on Monday that the agreement awarding Sino Hydro the
Kariba expansion work had jumped the gun and would cause problems with other
Chinese companies should it be implemented without going to tender.
“Sino Hydro made an offer, (but) it jumped the gun on many issues,” said
Chifamba. “The feasibility studies had not been done. We were going to have
problems with other Chinese partners. The only way was to go to
international tender,” he said.
Chifamba said such large projects needed very high levels of transparency to
encourage investment and participation by the most competent company through
a tender process.
“We need maximum transparency to encourage funding. This would also give us
an opportunity to evaluate the best tender and compare the services of the
companies in an open manner,” Chifamba said.
The debt laden energy utility conceded that the perennial power shortages
could only be solved by engaging in Public Private Partnerships (PPP) to
build new electricity generation plants. However, Chifamba suggested that
investors were wary of Zimbabwe’s inconsistent policies.
“We are not the most attractive investment destination in the world,” he
said. “Electricity generation is a long term investment. There must be
stability, and currently there is nervousness among investors, for instance,
around indigenisation policy.”
Most local parastatals are debt ridden making them unattractive to
investors. Zicosteel owes about US$240 million to Chinese and German banks.
The situation is the same at the National Railways of Zimbabwe, Air
Zimbabwe, Noczim, Grain Marketing Board, Agribank, Cold Storage Company,
TelOne, NetOne and the Zimbabwe Power Company (ZPC). The ZPC has been
shortlisted for privatisation or restructuring in the short to medium-term.
In another development, Chifamba announced that Zesa would soon embark on
the ambitious Batoka hydro-power project with potential to generate 3000MW
after finally agreeing to settle a US$260 million debt to Zambia for the
shared Kariba infrastructure inherited at independence in 1980.
The dispute revolved around an unpaid debt for infrastructure that Zimbabwe
inherited at Independence from the Central African Power Corporation (Capco)
during the federation era.
Chifamba said: “Zesa will start servicing the Capco debt commencing next
January and that will give us the greenlight to start the Batoka project.”
Zimbabwe’s power stations are operating at 50% capacity and producing 1 300
MW compared to a national demand of 2 400 MW. The utility meets the
shortfall by importing from the DRC’s power company Snel, Eskom of South
Africa and HCB of Mozambique.