eBusiness Weekly
Oliver Kazunga
Business Writer
ZIMBABWE has finalised a standardised implementation agreement to accelerate the generation of 1 100 megawatts at a cost of US$1 billion by 27 Independent Power Producers (IPPs).
The projects have been recommended for Government support. Announcing the Government Implementation Agreement (GIA) in Harare early this week, Finance and Economic Development Minister Professor Mthuli Ncube noted that in the formulation of the National Development Strategy 1 (NDS 1) and in line with the target for an upper middle-income status by 2030, reliable and sustained energy supply was a key enabler for sustained economic growth.
He said the Government intended to speed up investments by the IPPs with a focus on solar projects, adding successful implementation of the solar projects required economic tariff.
The GIA has three major components, project development support agreement, power purchase agreement; and Reserve Bank of Zimbabwe (RBZ) Undertaking for foreign currency convertibility and transfer.
“I am delighted to announce the finalisation of the GIA with these three components through the work of the Ministry of Energy and Power Development, Attorney General, RBZ and the Ministry of Finance and Economic Development.
“Government guarantees the economic tariff to qualifying IPPs solar projects that would have passed the screening process.
“After an IPP has successfully completed the screening process, a GIA is signed and the investor is ready to invest,” said Prof Ncube.
“The solar IPP projects will generate about 1 000 MW for an estimated cost of US$1 billion.
“The additional generated power will go a long way in alleviating the power shortages in Zimbabwe.”
Prof Ncube commended the African Legal Support Facility (an international Organisation hosted by the African Development Bank Group in Abidjan Cote d’Ivoire) for their invaluable legal advice and support in coming up with the standardized GIA which is in line with the international best practice.
At present, Zimbabwe is faced with a critical power supply situation which has seen domestic and industrial consumers going for long hours, outside the normal load shedding schedule without electricity.
The power situation caused by frequent breakdowns at Hwange Thermal Power Station, has been exacerbated by the water shortages in Kariba Dam which provides the bulk of the country’s electricity supplies.
The Zambezi River Authority, which runs the Kariba Dam, has directed the Zimbabwe Power Company to stop generating electricity from Kariba until the water levels in the dam improves, at least by January next year.
As of yesterday, ZPC indicated on its website that the country was producing 847MW with Kariba Hydropower plant whose installed capacity is 1 050MW generating 401MW while 429MW came from Hwange Power Station that presently has an installed capacity of 920MW.
Munyati Power Station, which is one of the three small thermal power plants in the country was producing 17MW while Bulawayo and Harare were not generating anything. Hwange Thermal Station is undergoing expansion works through the addition of Units 7 and 8 with a combined output of 600MW while one of the units is expected to go on stream by month end, adding 300MW to the national grid.
As a stop gap measure, the Government has also negotiated for about 500MW with Zambia and Mozambique and the power imports are expected any time soon. The 27 solar IPPs project, which are at various stages of their investment processes include the 75MW plant by Synogy Power in Beitbridge, Gombe Power Solutions (50MW).
The Solar Group (50MW), and the 50MW plant by AF Power in Bulawayo, among others.
“Some have PPA negotiated with Zimbabwe Electricity Transmission and Distribution Company (ZETDC), which Government is now extending Government Guarantees.
“The Government guarantees the economic tariff to qualifying IPPs solar projects that would have passed the screening process,” said Prof Ncube.
The screening process involves applying for licencing by the Zimbabwe Energy Regulatory Authority (Zera), negotiating for Power Purchase Agreement (PPA), as well as submission of proof of funding.
After an IPP successfully completes the screening process, a GIA is signed and the investor is ready to invest. In line with the tenets of an upper middle-income economy, the Second Republic crafted the National Renewable Energy Policy strategy, which aims to achieve and install renewable capacity of 1 100MW or 16,5 percent of Zimbabwe’s total electricity by 2025.
ZETDC acting managing director Engineer Howard Choga is on record saying under NDS 1, the country requires about 3 500MW. By 2030, the Second Republic’s target is for installed renewable energy capacity to be 2 100MW or 26,5 percent of the overall electricity supply, which is projected to be about 11 000MW.
“In order to achieve the objective of powering the economy towards an upper middle income by 2030, the Government undertook to upgrade, rehabilitate and maintain the existing power generation infrastructure with priority being given to the development of new generation capacity through fast-tracking ongoing projects and opening new projects, which take cognisance of a diversified energy mix.
“The strategy clearly outlines that Government policy will promote independent grid operators who want to contribute power into the national grid and to their clients.
