China to finance Kariba South expansion
Monday, April 26, 2010
Business Reporter
ZIMBABWE has signed a Memorandum of Understanding with Sino Hydro of China to focus on the expansion of the Kariba South Bank extension through funding from Chinese financial institutions.
The planned Kariba South Bank extension has the capacity to produce between 250 – 360 megawatts.
Finance Minister Tendai Biti and Minister of Transport and Communication Nicholas Goche led a delegation to China to present the country’s priority infrastructure projects that require immediate funding.
The two parties also agreed on the possibility of developing the Batoka Gorge Project.
Zimbabwe submitted a list of 20 projects to the China Export and Import Bank, necessary to achieve the country’s macro-economic stability and growth during the period 2010 – 2012.
In a statement from the ministry of Finance, Minister Biti indicated that major infrastructure sectors identified included energy and power generation particularly the implementation of Kariba South Extension and Batoka Gorge projects.
“The rehabilitation of the road network, rail network, telecommunications and ICT infrastructure development to support both the fixed and mobile network, broadband network service were also on the list,” read part of the
statement. The signing of the MoU comes at a time when Zimbabwe is struggling to meet its power demands, negatively affecting economic development.
Power supply challenges and inefficient energy use may hold back industry from the envisaged recovery.
Power shortages pose the biggest threat to the country’s recovery’s economic recovery because it requires huge amounts of funding.
The Zimbabwe Electricity Supply Authority is sitting on a US$300 million power debt, making it difficult to attract investors.
The country has total installed capacity of 1 680 megawatts, with 750 MW from Kariba South, 780 MW from Hwange Power Station and 150 MW from small thermals – but only 940 MW of this is currently available against a peak demand of 1 950 MW.
Despite the country importing about 35 percent of its power requirements there is still a deficit of between 700 MW and 800 MW.
Meanwhile, China Development Bank also agreed in principle to support the presented priority areas identified and proposed the development of a five to 10-year Comprehensive Framework which will form the basis upon which concrete projects will be structured including implementation timelines and targets.
The two parties agreed on the implementation of enablers for economic recovery with support targeted at energy and power development, road and rail rehabilitation, ICT infrastructure and other infrastructure projects.
They also agreed on the provision of lines of credit to agriculture through a US$30 million facility to Agribank and consideration of commercial interest in the Infrastructure Development Bank of Zimbabwe.
China Development Bank will soon undertake a due diligence and needs assessment on the identified enablers for economic recovery and identification of contact points for both parties to ensure the speedy exchange of information and facilitate the implementation of the agreed points.
The Zimbabwe delegation expressed the need for more investments in the telecommunications sector by Huawei Technologies. Minister Biti said Government was looking for a strategic partner for its telecommunications
companies with the ability to ensure the expansion of the network, construction of fibre optic backbone and roll out of 3G and 4G services.
Resultantly, the two parties signed a Memorandum of Understanding for the deployment of a national fibre backbone at a cost of US$48 million and the modernisation of the current network at a cost of US$30 million. The company also offered an exchange training programme for the telecommunications sector at its university.
China Telecommunications Company Ltd offered to work with NetOne on its network expansion programme through Build Operate and Transfer arrangements. A number of discussions were held with Chinese companies with interest in Zimbabwe, that includes Sino Steel Corporation, with a majority stake in Zisco as well as the construction of a new parliament building in Zimbabwe.