Investor fears hurt power expansion

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Zimbabwe is failing to attract funds to build new power stations and upgrade existing ones because investors are still nervous, despite the end of years of political turmoil after forming a power-sharing government.
Energy and Power Development Minister Elias Mudzuri told reporters yesterday the country was producing 1 100 megawatts, less than half of the 2 700 MW required.
Mudzuri said the government was inviting independent power producers (IPPs) to invest in the electricity sector, but none had been forthcoming.
“We are ready to give new licences to such ventures. This will help us to have new power plants to enable us to deliver adequate power to the whole nation,” he said.
“To be honest with you, there are no concrete commitments. People have made enquiries … some have signed MOUs (memoranda of understanding),” Mudzuri said.
“The difficulty in this country is the atmosphere of investment. We’re saying those who want to come, come and join us now, but the (lack of) confidence is what is killing us.”
Zimbabwe’s bid to recover from a decade of economic contraction is being held back by electricity shortages and badly needs billions of dollars to set up new power plants and rehabilitate obsolete equipment.
A power-sharing government formed by bitter rivals, President Robert Mugabe and Prime Minister Morgan Tsvangirai last year says it needs at least $10 billion to fix an economy which declined by as much as 50 % between 2000 and 2008.
Mudzuri said a recent agreement signed with China’s Sinohydro to expand the Kariba hydro electricity plant was just one of many unfulfilled agreements in Zimbabwe’s quest to expand power generation.
“There have been so many MOUs in this country and nothing has been fulfilled. There have been so many promises.” Mudzuri’s MDC party is opposed to an empowerment law driven by Mugabe that seeks to transfer control of all foreign firms to local blacks. He said the law would not apply to the energy sector.
“We are not forcing this indigenisation law on anyone who wants to come into the power producing sector. We are not asking them to have any percentage of investment under the indigenisation law,” he said.
Mudzuri added that the government was close to setting up an independent regulator for the energy industry, which industry experts say is a key requirement for private power producers.
The government was still pursuing an $81 million loan from the Development Bank of Southern Africa to rehabilitate the 750 MW Hwange thermal station, which is generating only 300 MW due to ageing equipment.
“They are still assessing our capacity to pay, I hope we get that funding. It’s very little, but it’s a lot of money for Zimbabwe,” said Mudzuri.