Zesa shutting down 3 old power plants, why plans to save them failed

THE government is shutting down three thermal power stations, with a combined installed capacity of 240MW, because they have become too old and costly to run. According to Energy minister Edgar Moyo: “At an average age of 75 years, the thermal plants significantly exceed their intended lifespan of 25 years and operating them has become financially unsustainable.”

He says running the Bulawayo station now costs US$0,46 cents per kilowatt hour, making it too expensive to run.

Over recent years, the government announced various deals to revive these power stations. What happened to them? The contracts fell through mostly because they were awarded to companies that did not have the pedigree to deliver. Here, we take a look back at what went wrong.

Munyati: The “credible partners”

The Munyati Power Station was built in 1946, the same year as the Nuremberg trials after World War 2.

Initially, it had a capacity of 120MW, but fell into disrepair. In 2015, the government sought partners to add 60MW.

The US$163 million tender was awarded to Jaguar Overseas, an Indian firm. After four years of waiting, in 2019 ZPC acting managing director Robson Chikuri wrote to the Procurement Regulatory Authority of Zimbabwe to cancel the deal: “A due diligence by ZPC on Jaguar Overseas Limited noted that whereas Jaguar Overseas Limited indicated that it had secured 100% funding for the project, only 15% of the funding could be confirmed by its funders.”

When ZPC became impatient over the delay, Jaguar wrote to claim it had funding partners queuing up, mentioning PTA Bank and DBSA.

The company wrote: “DBSA in particular has expressed repeated interest to support and lead a fundraise for Munyati. On request, they will issue a letter of support.”

Why did ZPC sign up a company that couldn’t do the job?

Samuel Undenge, then Energy minister, had remarked that tender winners were “not compelled to demonstrate a track record in execution of energy projects”.

These companies were only required to partner “credible, reliable competent technical partners”.

Who were these “credible” partners?

Jaguar’s local partner was Intratrek, a company represented in Zimbabwe by Wicknell Chivayo. Intratrek itself was not an energy company.

It was a middleman for other contractors, themselves troubled. Green Solar Europa, which Intratrek listed as one of its key partners during the tender, was in fact insolvent at the time the tender was awarded.

Harare and the “little-known companies”

The Harare Power Station is 82 years old, built as the battle of Stalingrad raged in World War 2.

It has been basically idle for years, only coughing up little power intermittently. To refurbish the station, the government chose Jaguar Overseas for the US$73 million contract.

In its tender documents, Jaguar, represented again by Intratrek, claimed it would secure cash from Indian funders, including the Indian Eximbank.

However, the bank had at the time raised a note on Jaguar and another Intratrek partner, Angelique International.

According to the bank, the two were part of a group of “little-known companies” that had benefited from “a large number of hugely concessional lines of credit extended by India to highly indebted poor, low and middle-income countries in Africa”.

The bank said it had “pointed this out to the ministries of Finance and External Affairs (of India)”.

Inside government, some raised concern that Jaguar had been awarded the Munyati contract after failing to deliver on the Harare plant.

In response, the then State Procurement Board responded strongly in a letter, dismissing any attempts to reverse the award as “irrational and illegal”.

They pressed on with the contract. The project never took off.

Bulawayo: Losing battle

The Bulawayo plant was commissioned in 1947, and for years was an iconic marker of the city.

In 2015, the government announced it was seeking US$110 million from the India Eximbank to revive the plant.

The proposed project included an ambitious plan to build a pipeline from Khami Dam to supply water to the station’s boilers.

The plans were disrupted partly by a war between the Bulawayo City Council, the original owners of the plant, before legal changes, and ZPC.

The power company had been granted a generating licence by the Zimbabwe Energy Regulatory Authority to lead the repowering project. ZPC also failed to reach financial closure with India Eximbank, which had tendered for contractors to work on the project.

This failure left authorities with no option but to decommission the plant.

No “dirty” funding

In 2020, Rio Energy, a unit of RioZim, announced that it had reached an agreement with China Gezhouba Group Corporation to build the long-delayed Sengwa coal power plant for US$3 billion.

A year later, Chinese banks announced that they would no longer fund coal projects abroad.

That took Chinese banks, the world’s biggest funders of such projects, off the table.

China’s decision left the Sengwa project, which would have been Zimbabwe’s largest ever energy investment, without a funder.

Yet, in the years when coal funding had been available, Zimbabwe had mishandled the opportunities that had come its way. The window was missed, and now it has closed.