The Sunday Mail
ONLY four private independent power producers (IPPs) are feeding electricity into the national grid, with 15 struggling to raise capital at reasonable interest rates on the international market.
There are also reservations on the price at which Zesa buys electricity from the IPPs.
Zimbabwe’s electricity tariffs at USc9 per kilowatt are theoretically among the lowest in the region, meaning small time players struggle to make ends meet.
The Zimbabwe Energy Regulatory Authority (Zera) has licensed 22 power projects, of which 19 are IPPs and three are state-owned.
Only four IPPs operating in the Eastern Highlands – Duru (2,2MW), Nyamingura (1,1MW), Pungwe A (2,75MW) and Chisumbanje Power Plant (8MW) – are generating and channelling power to the national grid.
Triangle Limited, which has an installed capacity of 45MW, and Hippo Valley (33MW) are generating power for own consumption using bagasse.
Chisumbanje is consuming about 4MW at its ethanol project.
RioZim, which was licensed to generate 2 000MW more than 12 years, is grappling with multiple challenges in trying to roll out its project in Sengwa.
Industry and domestic power consumers are smarting from unremitting outages, but Government is presently expanding Kariba South hydropower statition and Hwange Hwange Power Station in order to shore up supplies by 2018.
Hwange and Kariba South are expected to add 600MW each.
However, all IPPs lined up will generate more than 7 779MW – nearly four times peak national demand.
A Green Fuel spokesperson said last week the ethonal plant was capable of producing more than 225MW when all projects become operational.
“Green Fuel and the ZETDC (Zimbabwe Electricity Transmission and Distribution Company) constructed the power line to export this power at a cost of US$2,5 million.
“The current ethanol plant has the capacity to produce 18MW of power; however, the output is dependent on how much ethanol we produce. As we are only producing ethanol to satisfy the mandate of E15 (15 percent ethanol, 85 percent unleaded), the plant currently produces approximately 12MW of power.
“Should the mandate increase to E20, the full capacity of 18MW will be produced. There is also immediate potential to increase power generation to 35MW with an additional boiler and generator.
“At the final stages of the project, it is envisaged that ethanol production will be contributing up to 225MW into the national grid,” said the spokesperson.
Government recently threatened to cancel RioZim’s IPP license over delays in genereting power, 12 years after the issuance of a license.
The project has capacity to generate 2 000MW, which is 245MW shy of the country’s presently installed capacity, excluding what other IPPs can generate.
The Gokwe North Coal Reserve is a 50/50 joint venture between Rio Tinto plc and RioZim Limited.
“The proposed power project(s) is central to RioZim’s strategy and is integral to both RioZim’s and Zimbabwe’s long-term growth.
“Over the last 15 years the owners have spent over US$10 million exploring the resource to ensure that the full value is identified,” said RioZim acting chief executive officer Mr Noah Matimba last week.
He said significant progress has been made in determining the resource size and extent of power generating opportunities over the last 10 years.
“However, the ultimate success of the project is underpinned by a number of limiting factors that face all Independent Power Producers in Zimbabwe.
“Firstly, the project is constrained by a lack of customers who are ready, willing and able to pay for power supply at a reasonable cost.
“Secondly, there has been a dearth of sponsor companies and utilities that are willing and able to partner the project at this point in time. Finally, access to project finance is limited under the current market conditions,” said Mr Matimba.
Mr Matimba said power projects required long-term affordable cost financing, and RioZim and Rio Tinto are considering various options in order to get the project off the ground.
He also said there have been positive engagements with NHI and Shanghai Electric who are separately working with the dimensions and specifics of the coal to produce a plant design and plant cost that can be used to reassess the project’s feasibility.
“The ability to update the feasibility with regard to size, scale and cost will determine the time-lines to completion.
Once we achieve financial closure construction will take about three years.
“The key at present is to update the Bankable Feasibility Study (BFS) and look for viable customers for the power. We are working on both of these,” said Mr Matimba.
Power is seen as a key economic enabler that will unlock value from agriculture, manufacturing, tourism and mining, which are currently hamstrung by the crippling power deficit.
It is believed that RioZim has committed a “substantial sum of money” this year to an Indian consulting company, WAPCOS, to update the BFS to ensure potential partners are provided with up-to-date and reliable data on the resource.
Added Mr Matimba: “This BFS will give reliable estimates as to the costs considering any possible changes in size of the project or technology being used. We believe the project, which will be built in phases, will cost over US$4billion.”
