HomeNewsGovt should engage energy investors

Govt should engage energy investors

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The government has been urged to avoid adopting a hardline stance that will completely disenfranchise potential private sector energy investors but should make available full details on deal structures, an energy analyst has said.

With no internal capacity, at both State and company level, to mitigate against power shortages the government engaged both foreign and local independent power producers (IPPs) to boost generation capacity.

Early this year the government licensed several IPPs whose projects are aimed at helping a struggling power sector by doubling current electricity output to 4 450 megawatts (MW).

However they are yet to produce power citing low tariffs. Energy analyst with international research firm Frost & Sullivan, Vincent Maposa, told NewsDay in an emailed response that the government should come up with a project pipeline directory with clear specifications on the private sector’s level of involvement.

“The government of Zimbabwe can easily heighten chances of deal closure by stipulating their preference for private sector involvement within the energy sector. Several best practices such as design, build, finance and maintain, build, operate, transfer, have been used in other countries,” said Maposa.

“The government needs to identify a suitable structure for deals and adopt a clear opinion on which method suits them. The government should however avoid adopting a hardline stance that will completely disenfranchise other potential investors.

“Having a project pipeline directory with clear specifications on the private sector’s level of involvement eases the path to project closure. It is disadvantageous for Zimbabwe to assess opportunities from a resource availability perspective.”

Maposa said tariff increases in the region were unavoidable to fund power expansion “because their inabilities in the past to cover operation costs, and fund capacity expansion are one of many reasons why the region is unable to meet electricity demand”.

The Frost & Sullivan analyst, although acknowledging growth in both the mining and manufacturing sectors, said they continue to be affected by the power shortages.

“Indeed growth, has occurred, but albeit from a low base and in order to smoothen the path to full economic recovery electricity has to be available” he said.

The country, currently grappling with massive power cuts, requires 2 200MW of power per day, but generates less than 1 300MW, leaving deficit of 900 megawatts.

The recent flighting of a $1,3 billion tender by the government towards the expansion of Kariba and Hwange power stations is expected to enable the country to meet its power demands.

Hwange’s six generating units have a capacity to produce 950MW, but the units are prone to breakdowns, hence reduction in power generation.
Kariba Hydro-power Station has a capacity of 750MW.

The State-owned Zimbabwe Electricity Supply Authority’s inability over the years to boost generation capacity at its ageing power stations and a critical shortage of foreign currency to import sufficient electricity from neighbouring countries has left Zimbabwe grappling with severe power shortages.

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