Namibian bank funds Zim’s billion-dollar energy project

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WINDHOEK – Zimbabwe has looked at Namibian financial institutions for the expansion of the Kariba South Hydro Power Plant. Standard Bank Namibia was the successful financial institution that got to provide a loan facility of N$500 million to the Zimbabwe Power Corporation for the 300 MW extension of the Kariba South Hydro Power Plant.

The facility makes up 10 percent of the engineering, procurement and construction costs for the expansion with China Exim Bank providing the balance of 90 percent.

Sino-Hydro, a Chinese firm, was contracted to construct two additional units at Kariba with a capacity to generate 300MW at a cost of US$533 million (about N$6.2 billion). Work on the project has started with excavation works on batching plants, access roads and water tanks having been completed.

Sino-Hydro was also awarded US$1.1 billion (about N$12.8 billion) contract to expand the Hwange Thermal Power Station to add 600MW to the Zimbabwe national grid.

The Head of Corporate Banking at Standard Bank Namibia, Amit Mohan, said the extension of loan facility to Zimbabwe Power Corporation (ZPC) “is significant in its contribution to increasing its power generation in southern and central Africa”.

“The execution of this innovative finance structure was the result of Standard Bank’s local presence in both jurisdictions and its strong relationships with key stakeholders,” Mohan says.

The structure of the facility is cross-border, placing reliance for repayment on a long-term power purchase agreement (PPA) between ZPC and NamPower. ZPC has a long track record of delivering power to NamPower. The PPA provides a long term and sustainable cash flow stream to ZPC, enabling the entity to raise further funding for new projects and rehabilitation of existing infrastructure.

Power is one of the core sectors that Standard Bank is focusing on. “It was an ideal opportunity for the bank to get involved. NamPower buys power from ZPC and therefore it was important for us to support our power sector through this loan facility,” says Mohan.

Last week the Zimbabwe’s Minister of Energy and Power Development Dr Samuel Undenge, during a tour of the power station, said the power deficit being experienced countrywide should end by 2018.

“We need the project to be complete even before the due date but you have to supervise the contractor in ensuring quality standards are met throughout the project,” he said.

“Do not leave room for slip-ups. Significant progress has been made in terms of construction and I am sure we will be able to complete construction before 2017 although the set date is 2018,” the minister said.

ZPC and Sino-Hydro, Dr Undenge said, should bear in mind that electricity was the cornerstone of economic development.
“You are the foot soldiers on the ground responsible for the production of electricity and my vision is to see the insufficiency we are experiencing disappearing such that we enter an era of producing surplus power for export in the region,” he said.

ZPC managing director, Engineer Noah Gwariro, said US$91 million had been disbursed so far for the Kariba project with China Exim Bank providing US$80 million and the remainder coming from ZPC.

“The first drawdown was made on October 31 last year and this paved way for the contractual commencement on November 10 last year,” he said.

“This means about US$260 million is yet to be disbursed and it is going to come in tranches.”

To end the chronic power shortages, Zimbabwe is working on a raft of public and private expansion projects, chief among them Kariba and Hwange. The country generates about 1 300MW against a peak demand of 2 200MW.
– Additional reporting by The Herald

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