RIOZIM has signed an exclusivity agreement with a Chinese state-owned firm Power China for the construction of a 2000-megawatt (MW) thermal power station in Sengwa, Gokwe North, raising expectations the long-standing plan is slowly coming to fruition, sources said last week.
An exclusivity agreement (or a lock-out, shut-out or no-shop agreement) is designed to ensure that the other party to a prospective deal negotiates solely with the client for a period of time.
The contractor is already on site, conducting initial evaluations which precede financial closure.The first phase of the project involves the construction of a 700MW plant.
Sengwa, which carries a $2,2 billion price tag, is among several independent power projects that have been licensed by the regulator, the Zimbabwe Energy Regulatory Authority (Zera).
Although RioZim chief executive officer Mr Bheki Nkomo was not available for comment by the time of going to print, sources said Power China – a sister company of Sinohydro, which was involved in the expansion project on Kariba South and is presently working on Hwange Power Station’s Unit 7 and 8 – is already preparing a bill of quantities.
“They (Power China) are on the ground now (Power China). They are doing a bill of quantities on the water pipeline and power lines. So, they are updating (details) on two issues, as required by financiers.“The bank wanted to know the cost of the water pipeline from Kariba to Sengwa, so they are currently costing out that, then the cost of evacuation lines from Sengwa to Sherwood, they wanted proper costing,” said the source privy to the transaction.
“They also want the cost of building the town where workers at the power station will stay. We had also promised to deliver a Special Economic Zone, because we will require customers who will buy the power in forex.
“We want to obtain export processing zone at Sengwa. So, we have applied and the Office of the President is looking at it and on our partners. So things are moving well and we are very positive on the project,” added the source.
Upon completion, Sengwa will be among Zimbabwe’s two biggest power plants, including the 2 400 MW Batoka project that is being jointly pursued by Zambia and Zimbabwe.
Further, the envisaged thermal power project will be fed from RioZim’s coal claims, which are understood to hold more than 1,3 billion of the commodity.
Over the years, the company has been struggling to secure funds for the project.But the pro-business administration of President Emmerson Mnangagwa has renewed investor interest.
RioZim recently shortlisted six prospective investors – among them Power China and US electrical systems behemoth General Electric (GE) – for the project.
The country has been shoring up its power supplies, and recently completed the 300MW Kariba South Hydro-power Station.
These projects, which have augmented supplies to the local power grid, have naturally cut the country’s import bill.
The country used to spend $40 million of scarce foreign currency to import power from Eskom of South Africa and Mozambique’s Hydro Cahora Bassa.
Separately, the Zimbabwe Stock Exchange-listed miner is currently working with a Japanese technical partner, Univergy, to build a 100MW solar power plant for its mines.