RioZim Ltd. chose a state-owned Chinese company to design a $2.1 billion power plant it plans to build in Zimbabwe, which faces frequent blackouts, and is lobbying South Africa’s electricity utility to buy from the facility to help attract investors.
State Nuclear Electric Power Planning Design and Research Institute, based in Beijing, “has already come in to design the generators” for the 2,800-megawatt coal-fired Sengwa plant, RioZim Non-Executive Director Caleb Dengu said. RioZim has written to South African Energy Minister Tina Joemat-Pettersson asking that Eskom Holdings SOC Ltd. buy 2,000 megawatts, he said.
Zimbabwe rations power daily, producing and importing about 1,300 megawatts against demand of about 2,200 megawatts. RioZim is working on raising funds through equity and debt for the facility, Chief Executive Officer Noah Matimba said in May last year. Of the $2.1 billion needed for the plant, $50 million will be for a coal mine that will supply the station.
“There are some companies from Dubai which are interested, we have from South Africa which are interested, but they all have conditions which some of them are beyond our control,” Dengu said in a Sept. 22 interview at the site of the plant and coal mine, that’s about 450 kilometers (280 miles) northwest of the capital, Harare. “Most of them will say they will finance if Eskom comes on board with an off-take agreement, because they trust Eskom, because it is bankable. ZESA is not bankable,” he said, referring to Zimbabwe’s utility.
Eskom is aware of some of RioZim’s plans, but hasn’t had any direct engagement, spokesman Khulu Phasiwe said by phone. Discussions would begin on a government bilateral level and then the utilities would be involved when it reaches a technical stage, he said. Excess capacity could become a part of the Southern African Power Pool, a common market for electricity in the 15-nation Southern African Development Community, he said.
Maropeng Ramokgobathi, a spokesman for South Africa’s Department of Energy,
didn’t immediately respond to an e-mail seeking comment.
Financing Plans
RioZim wants financing agreements in place by January, Dengu said. It obtained a 30-year license to operate the facility from the Zimbabwe Energy Regulatory Authority this month, he said.
Aliko Dangote, Africa’s richest man, is considering investments in Zimbabwe’s cement, power generation and coal-mining industries as part of an expansion in the southern African nation, he said in August last year. As part of the plan, he is considering partnering with RioZim through Black Rhino Group, a $5 billion African infrastructure fund in which U.S. private-equity group Blackstone Group LP is a co-investor. One of the conditions for the investment is that the country reforms Zimbabwe Electricity Transmission and Distribution Co.
“We’ve informed the government about the requirements but we said ‘it’s your play, it’s beyond our control to decide,’” Dengu said. “That’s why we are preferring other investors who do not have these conditions.”
Energy Permanent Secretary Partson Mbiriri isn’t aware of Black Rhino’s request for reform of the country’s power distributor, he said by phone Friday. “What I know they want is that, for their projects to take off, they need power. I am not aware of those said reforms.”-Reuters
