THE government has signed A $320 million preferential loan agreement with the Export-Import Bank of China (ChinaExim Bank) which is expected to finance expansion works at the country’s largest hydro-power station.
BERNARD MPOFU,ACTING BUSINESS EDITOR
Speaking at the signing ceremony, Finance minister Patrick Chinamasa said the expansion project at Kariba South Power Station would ease the country’s energy deficit.
The project, the Finance minister said, will see two units at the power station increase their generating capacity by 300 megawatts (MW).
The project is expected to take four years to complete.
The loan, Chinamasa added, will have an annual interest rate of 2%, a grace period of five years and a repayment period of 20 years.
“The preferential loan agreement we have just signed today seals the co-funding arrangement to actualise implementation of the Kariba South Hydro-Extension Project at a cost of $355 million,” Chinamasa said.
“Under this arrangement, the bank will provide funding amounting to $319,5 million, representing 90% of the total project cost, while the government, through the Zimbabwe Power Company, will finance the 10% balance amounting to $35,5 million.”
- Chamisa under fire over US$120K donation
- Mavhunga puts DeMbare into Chibuku quarterfinals
- Pension funds bet on Cabora Bassa oilfields
- Councils defy govt fire tender directive
Keep Reading
Zimbabwe’s current generating capacity stands at 1200MW against a current projected energy demand of 1 700MW as the country’s key economic sectors — agriculture and mining — continue to underperform.
“This reflects a suppressed demand considering that industry in this country is operating below full capacity, otherwise the amount of energy required is 2 200MW,” Chinamasa said.
Capacity utilisation in manufacturing this year declined to 39% from 44% due to a myriad of problems besetting the economy.
Chinamasa reassured the bank that government would honour its obligations to the financial institutions despite a perceived poor country risk.
Zimbabwe has an external debt of nearly $10 billion.
“The government of Zimbabwe has also made an undertaking that it will honour and protect the power purchase agreement to be entered into by the Zimbabwe Electricity Transmission and Distribution Company and Kariba Hydro Power Company, a special purpose vehicle owned by ZPC,” Chinamasa said. Last year, China EximBank provided a concessional loan of $150 million for the rehabilitation of Victoria Falls International Airport.
