Zimbabwe should settle a $20 million dollar debt owed to Namibia to fully benefit from local generation capacity, failure of which the country will continue to export power at subsidised rates to that country.
The government secured $40 million from Namibia for the refurbishment of the Hwange Power Station a few years ago in exchange for power and still owes about $20 million.
NamPower is still receiving power in terms of a 2007 deal in which the Namibian power utility provided a $40 million loan to refurbish Zesa’s 400 Megawatts (MW) Hwange Power Station. In return Zesa was supposed to supply 150MW of power to Namibia for five years.
Responding to questions on Tuesday regarding the deal, Energy and Power Development minister Elton Mangoma said:
“But clearly we are selling this power below cost. We are exploring ways for this position not to continue. As long as we don’t honour their obligations we will still be prejudiced.”
Early this year Mangoma said the country was subsidising Namibian power exports and a review would be made.
He said the country would be increasing power generation in the medium-term from Hwange and Kariba power stations by an additional 900MW by 2016 as part of the power sector system development plan.
The expansion of the two projects is scheduled to be completed by 2015 and 2016.
“The Zimbabwe Power Company has already engaged technical and financial advisors for the implementation of the medium-term projects. The procurement process has also begun and it is anticipated that projects implementers will have been identified at the beginning of 2012,” said Mangoma.
In the long-term, Mangoma said the government would focus on Gokwe North thermal power plant and Batoka hydro-power projects.
“A number of small hydro-power plants have been licensed. The government is about to conclude negotiations aimed at addressing issues that have hindered progress of new projects such as the Batoka hydro project,” he said.
The small thermal power stations are operating at about 30% capacity contributing 90MW to the power system as a result of shortage of coal.
Zimbabwe is currently receiving 150MW on a firm basis from Hydro Electrica Cahora Bassa and Snel with an additional 350MW being negotiated for from time to time.
Mangoma said the country was short of power and Zesa had no funds to maintain the system as the industry did not have any meaningful investments in the past 10 years.
Meanwhile Mangoma said the government was working towards the introduction of the pre-paid meters by year-end and the State procurement board will float the tender.