adminOliver Kazunga Senior Business Reporter
THE delay in the completion of the Gwayi-Shangani Dam is likely to stall the implementation of a $2 billion coal mining and power generation investment by Chinese investors in the Gwayi area in Matabeleland North, a Cabinet Minister has said.
China Africa Sunlight Energy (CASE), a joint venture between Zimbabwe’s Old Stone Investments and a Chinese company Shandong Taishan, was granted the go ahead to extract coal-bed methane gas, build a 2,100MW thermal power station and a coal mine to the tune of $2.1 billion.
But the dam project, a major component of the National Matabeleland Zambezi Water Project, has been in limbo for years due to lack of funding.
Energy and Power Development Minister, Samuel Undenge, told Parliament recently that rolling out the new investment without adequate water supply would be a challenge.
He said CASE had agreed to finance part of the dam project as it would be the major consumer of the water from the dam.
“The power project is expected to begin in earnest before the end of the year. However, there’s also an issue on water supply for the power plant as you all know that the Gwayi-Shangani dam isn’t yet completed,” said Minister Undenge.
“CASE has agreed to part-fund the completion of the dam as they’ll certainly be the major consumers of the water at the mine and power plant.”
The minister said the dam project was integrated with a mine to supply water for coal production and use in the power station.
“Already some work is happening on the ground. The company (CASE) has been issued with a licence by the regulator and has agreed on a Power Purchase Agreement (PPA) with Zimbabwe Electricity Transmission and Distribution Company.
“Armed with the PPA agreement, they can now source funding for the project, which they’re doing,” he said.
On the Batoka Hydro Electric Power Plant, the minister said the plant was a bilateral project between Zimbabwe and Zambia at Batoka Gorge on the Zambezi River.
He said feasibility studies for the project which were done in 1993 showed that the plant could have a capacity of 1,600MW, to be shared by the two countries.
“There wasn’t much progress as the two countries had to settle the EX-CAPCO Asset issue emanating from the time of the federation.
“The two governments finally agreed on the amounts to be settled and so far we’ve paid Zambia a principal amount of $70 million for the debt.
“The two ministries of finance are now negotiating the interest amount,” said Minister Undenge.
He said after resolving the debt issue in 2012, the two governments agreed to work on the Batoka project.
“It was agreed that the first stage was to review the feasibility studies and also carry out an Environment and Social Impact Assessment.
“Two consultants are working on these issues and are expected to submit their findings. A project steering committee comprising senior staff from ministries responsible for energy and finance in the two countries and also senior managers of the power utilities of the two countries are driving the project,” said the minister.
Online Reporter