Prosper Ndlovu Business Editor
SOUTH African power utility, Eskom, has expressed interest in bankrolling implementation of the long awaited 2,400MW Sengwa Power Project, which has been in limbo for the past two decades.

Given the widening power supply gap in the region, experts have urged regional joint venture investments to boost power production — a key ingredient for investment and economic growth.

The project, then named Gokwe North Power Station, was mooted in the 1990s jointly by Zesa, the National Power of the United Kingdom and Rio Zim.

It was developed to feasibility stage but has failed to move beyond that stage.

The government, under the then Zimbabwe Electricity Regulatory Commission, granted Rio Zimbabwe Limited an independent producer licence in 2010 to establish a power plant in the coal-rich Sengwa area in Gokwe North.

Nothing has happened to date.

Parliamentarians expressed disquiet over the project last week when they asked Energy and Power Development Minister Samuel Undenge to clarify the status of the project and the duration of validity of the licence.

“Currently, Sengwa Power Station is negotiating for possible off-take agreements anchored by Eskom of South Africa and other regional utilities, to guarantee bankability of the project,” Minister Undenge responded.

“It’s important to note that due to its size, the project can’t be supported by the Zimbabwe market alone and it requires other regional markets as off-takers to make it bankable. The current efforts to raise funds are based on the original 1,200MW capacity the Gokwe North Plant had envisaged.”

RioZim, which has announced plans to exit Zimbabwe by selling its stake in Murowa Diamonds and Sengwa coalfields, has said it needed about $2.1 billion to build power plants that would produce up to 1,400 megawatts of electricity.

The company’s chief executive officer Noah Matimba recently said they were in talks with regional power trading firm, Southern African Power Pool and big Zimbabwean electricity users about an agreement to sell electricity to them.

“We do need a power purchase agreement in order that we can attract investors or attract those lenders that can give us (money),” Matimba said.

“We’ve signed an MoU with the Southern African Power Pool in the hope that we can begin to discuss a power purchase agreement with them and be able to create the necessary demand to attract investors.”

The power station project is capable of generating up to 2,000MW of power, almost as much as Zimbabwe’s demand. The proposed project envisages the construction of a number of smaller power plants over the next ten years.

The minister said the government was disturbed by the tendency by some operators who hold on to their licences for speculative purposes.

“To avoid this, the regulator, Zera, is now issuing conditional licences outlining the milestones to be accomplished to the point of project commissioning,” he said.

Minister Undenge warned that if the current efforts by Sengwa Power Company, which are expected to be finalised before end of 2015, fail to materialise, “Zera may be left with no option but to cancel the licence as the promoter would have failed to fulfil the licence conditions”.

He said the regulator will continue reviewing all licensed IPPs to ensure timely implementation of proposed projects.