The Sunday Mail
TREASURY has approved plans by the Infrastructure Development Bank of Zimbabwe (IDBZ) to issue two infrastructure bonds with a combined value of US$140 million to support the country’s energy, water and transport sectors.
The bank will issue the infrastructure bonds valued at US$65 million in two weeks time and proceeds will be used to shore up the struggling energy sector.
This comes after the IDBZ’s maiden US$30 million infrastructure bond in 2012 was fully subscribed and the funds were on-lent to the Zimbabwe Electricity Transmission Distribution Company (ZETDC) to finance the pre-paid meter project. IDBZ chief executive officer Mr Charles Chikaura told The Sunday Mail Business that proceeds from the US$65 million bond would be invested in the energy sector.
“The bank is on track to go to the market in the next two weeks to issue infrastructure bonds.
“The projects targeted for support from the bond issues are in the energy sector, covering generation, transmission and distribution up to a cumulative value of US$65million.
“This is an important sector which has been prioritised by Government under ZimAsset,” said Mr Chikaura.
Of late, the country has been hit by massive power outages but analysts contend that from 2017 onwards, the power situation will drastically improve on the back of massive investments in power generation.
The Zimbabwe Power Company (ZPC) recently signed a US$1,1 billion deal with a Chinese company, Sino-Hydro, for the expansion of Hwange Thermal Power Station.
The project will see the expansion of two units Hwange Units 7 and 8 to 300 MW each, ensuring an additional 600MW to the national power grid. Kariba South is also being expanded to the tune of US$533 million and would bring 300MW onto the national grid on completion.
Industry has cited erratic power supply as one of the factors constraining optimisation of capacity in the manufacturing sector.
Mr Chikaura said the IDBZ would issue additional bonds with an aggregate value of US$75 million “just before year-end for priority projects in the water and transport sectors”.
He could not be drawn into identifying specific projects that would be targeted. Mr Chikaura, however, noted that the bank will go onto the market next year with the housing bonds. IDBZ seeks to reduce the national housing backlog, which is estimated at 1,25million units, as local authorities grapple to provide both land for housing and the off-site infrastructure for already established housing units.
“The bank has already secured the requisite authority from the Ministry of Finance to issue appropriate tax free debt instruments in the market to raise the required funding. “The proceeds of these bonds, with an aggregate value of up to US$50 million, will fund the bank’s low cost housing projects in all major cities of Zimbabwe.
“The funding will also be extended to provide student accommodation at our universities countrywide. Before the end of this year, the bank will officially launch its housing delivery programme with the initial phase targeting 5,000 housing units.
“To this end, the bank will secure land from the Ministry of Local Government, Public Works and National Housing (and) the bank will also enter into joint ventures with property developers with private land while the bank’s contribution will be in the form of funding and project management,” said Mr Chikaura. Government, through its five-year economic blueprint, ZimAsset, intends to build more than 125 000 housing units by 2018, which translates to 25 000 units per year.
