Funder under pressure to pull out of Sengwa

The Industrial and Commercial Bank of China (ICBC), the world’s largest bank by assets, has come under pressure to withdraw funding from Zimbabwe’s planned 2 800-megawatt (MW) coal-fired power plant at Sengwa.

This leaves what is potentially the country’s largest energy investment in doubt.

Zimbabwe holds estimated coal reserves of 12 billion tonnes, according to data from the ministry of Mines, and is escalating its search for investment to exploit the reserves.

But environmental activist groups that have been lobbying ICBC to cancel the project funding claim the bank has committed not to bankroll the project.

“ICBC also confirmed that they will not fund the Lamu coal project in Kenya as well as the Sengwa coal project in Zimbabwe,” according to Go Clean ICBC, part of a coalition of 32 climate activist groups.

There was no comment from RioZim or ICBC.

The bank is the world’s biggest lender, with assets of US$4.9 billion last year.

Rio Energy, a unit of RioZim, last year announced it had reached an agreement with China Gezhouba Group Corporation (CGGC) to build the long-delayed power plant for US$3 billion.

CGCC, a subsidiary of the China Energy Engineering Corporation, one of the world’s largest construction firms, was to help raise funding for the project.

However, RioZim would now have to seek alternative funding if ICBC confirms it is pulling out.

Earlier this month, Go Clean said it had met ICBC and convinced the bank to withdraw its funding of projects in Africa.

“There have been some major campaign developments regarding our engagement with the Industrial and Commercial Bank of China (ICBC).

“These developments include the Bank’s continued dialogue with the Go Clean ICBC coalition to chart a clear road map for ICBC to stop funding coal,” Go Green said in a statement.

Zimbabwean rights groups, such as the Centre for Natural Resource Governance, also campaigned against the Sengwa project, saying it goes against Zimbabwe’s commitment to cutting carbon emissions.

Zimbabwe currently generates about 1 200MW from its old power plants, less than its peak demand of about 1 400MW.

The Zimbabwe Energy Regulatory Authority hopes the country will generate 1 100MW from non-hydro renewable energy sources by 2025, and the government floated tenders for 500MW of solar projects last year.

This year, Zimbabwe plans to add 100MW of solar energy from ongoing projects, Cabinet said last Tuesday.

However, Zimbabwe is still keen on using its coal resources. The Sengwa area alone has proven coal reserves of 1.3 billion tonnes, and RioZim has previously said there is enough coal there to support a 10 000MW plant.

But these resources have remained unexploited over the years as Zimbabwe has struggled to attract investment.

However, in 2018, RioZim finally started receiving letters of interest from potential investors.

Many large funders have cut back on lending into fossils, such as coal and oil.

In May, the Asian Development Bank, a key investor in energy, announced it was cutting back on fossils.

Last year, the UK announced that it would no longer fund coal, although British investment in projects such as Mozambique’s vast energy fields would continue. — newZWire