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Harare Bureau
THE Zimbabwe Power Company yesterday completed a $1,1 billion deal with Chinese firm, Sinohydro, for the expansion of Hwange Power Station.
Zimbabwe and China agreed to deals in infrastructure, energy and power during the President Robert Mugabe’s visit to the Asian country in August.
The expansion of Hwange Thermal Power Station units 7 and 8 will add 600 megawatts to the national power grid.
The project will take 42 months to complete from the date of financial closure, with ZPC and the government targeting to get the work started within the next six to 12 months.
Energy and Power Development Minister Dzikamai Mavhaire said the project showed the government’s resilience in the face of challenges, adding that benefits of the current efforts will be felt by generations to come.
“Hwange units 7 and 8 will be a brownfield coal-fired project next to the existing Hwange Thermal Power Plant,” he said.
“It relates to engineering design, procurement, construction and commissioning of 2×300 MW power units at the existing Hwange Power Station.”
He said the contract will also cover transmission infrastructure to evacuate the 600MW to Insukamini and Marvel substations in Bulawayo and to Sherwood substation near Kwekwe.
“It will be constructed at an estimated EPC contract cost of $1,174 billion,” he said. “The cost will rise to $1,5 billion, including development costs such as technical consultancy fees, loan interest and trust account for servicing the loan once draw downs on the loan begin.”
Minister Mavhaire said they had requested Sinohydro to start preliminary work on the expansion project while working on financial closure.
The deal marks another milestone in national efforts to end Zimbabwe’s chronic power deficits after ZPC recently concluded a similar deal with Sinohydro to expand Kariba South’s capacity by 300 MW.
Zimbabwe is working on expanding generation at Kariba South and Hwange among a host of public and private led initiatives aimed at closing the demand-supply gap to end the chronic power shortage.
The project would be funded from a China Export and Import Bank loan on 80 percent concessional and 20 percent commercial terms.
ZPC would mobilise the balance for the $1,5 billion total project.
The expansion is expected to have multiple benefits including jobs.
Sinohydro vice president for Africa, Wang Xinhuai, said they were honoured to participate in the two important national projects, which will greatly promote Zimbabwe’s economic development.
Zimbabwe requires about 2,200 MW at peak of demand, but is only able to generate an average of 1,300 MW.
derick.khumalo