RioZim picks Chinese firm to design coal-fired power plant

RIOZIM chose a state-owned Chinese company to design a $2.1 billion (R29bn) power plant it plans to build in Zimbabwe and is lobbying Eskom 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 coalfired Sengwa plant, RioZim Non-Executive Director Caleb Dengu said.

Raising funds

RioZim had written to South African Energy Minister Tina Joemat-Pettersson asking that Eskom buy 2 000MW.

Zimbabwe rations power daily, producing and importing about 1 300MW against demand of about 2 200 megawatts. RioZim is working on raising funds through equity and debt for the facility, Chief executive Noah Matimba said in May last year. Of the $2.1 billion (R29bn) 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,” said Dengu.

“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 was aware of some of RioZim’s plans, but had not had any direct engagement, spokesman Khulu Phasiwe said by phone.

Most of them will say they will finance if Eskom comes on board with an off-take agreement.

Discussions would begin on a government bilateral level and then the utilities would be involved when it reached 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, did not immediately respond to an e-mail seeking comment.

RioZim wanted financing agreements in place by January, Dengu said. It obtained a 30-year licence to operate the facility from the Zimbabwe Energy Regulatory Authority this month, he said.

Aliko Dangote, Africa’s richest man, was 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.

Partnering

As part of the plan, he was considering partnering with RioZim through Black Rhino Group, a $5bn African infrastructure fund in which US private-equity group Blackstone Group was a co-investor. One of the conditions for the investment was that the country reformed Zimbabwe Electricity Transmission and Distribution.

“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 was not aware of Black Rhino’s request for reform of the country’s power distributor, he said last 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.” – Bloomberg