Source: Vungu 30MW solar project gets sovereign guarantee – herald
Business Reporter
THE Government has issued a sovereign guarantee to back the payment obligations of the Zimbabwe Electricity Transmission and Distribution Company for the 30MW Vungu solar project, a move aimed at unlocking critical international funding for the renewable energy venture.
In General Notice 338 of 2026, published in the Government Gazette on Friday, Minister of Finance, Economic Development and Investment Promotion, Professor Mthuli Ncube, said the State would act as a guarantor for the project’s development support agreement.
Issued in terms of Section 300(3) of the Constitution and the Public Debt Management Act, the guarantee ensures the Government will cover costs if the agreement between ZETDC and Vungu Solar is terminated or if payment obligations remain unmet.
The Vungu Solar project, located in the Midlands Province, is a partnership between local firms Energywise Equipment and Impala Power, alongside international developer InfraCo Africa.
While a Power Purchase Agreement (PPA) was signed with ZETDC earlier this year, international lenders typically require a Government “backstop” to mitigate credit risk before releasing construction funds.
According to the gazette, the State’s liability in a buyout scenario would be calculated based on outstanding debt and shareholder contributions to ensure lenders and investors recoup their capital.
The payout formula also protects the developer’s profit margins through an “equity return” and covers legal and operational winding-down fees via “termination costs.”
To protect the fiscus, any payouts will be reduced by relevant insurance proceeds.
Vungu Solar is being treated as a “pilot” for Zimbabwe’s standardised Government Project Support Agreement (GPSA) framework.
For years, dozens of licensed Independent Power Producers (IPPs) have struggled to reach financial close due to a lack of sovereign guarantees and concerns over currency convertibility.
In 2022, the Government announced it would issue guarantees to independent power producers (IPPs) for projects totalling 1 000 MW.
This move aimed to clear a major hurdle that has deterred energy investors and left Zimbabwe facing persistent power shortages.
Minister Ncube then said the Government had agreed to a Government Implementation Agreement (GIA) for all solar IPP projects.
Under the GIA, IPPs are guaranteed an economic tariff, while the Reserve Bank of Zimbabwe (RBZ) ensures they can convert and transfer their earnings in foreign currency.
The framework addresses a primary concern for IPPs in Zimbabwe: the hesitation to invest in a market where they might sell power at a loss, earn in local currency, and face difficulties repatriating profits.
“A key ingredient to the successful implementation of the solar IPPs projects is a bankable GIA with an economic tariff,” said Minister Ncube then, adding the agreement includes a Project Development Support Agreement, Power Purchase Agreement and RBZ’s undertaking for foreign currency convertibility and transfer.
Under the policy, the Government guarantees an economic tariff to qualifying solar projects.
To qualify, developers must obtain a license from ZERA, negotiate a Power Purchase Agreement (PPA), provide proof of funding and subsequently sign the GIA.
By formalising the guarantee for the Vungu project, the Treasury is signalling a policy shift intended to attract private capital into the national grid. Once operational, the 30MW plant is expected to power approximately 76 000 households and save an estimated 75 000 tonnes of carbon emissions annually.
Analysts say the move is expected to boost investor confidence in Zimbabwe’s renewable energy sector as the country seeks to diversify its power mix.
Zimbabwe has made significant strides in solar energy investments, targeting renewable capacity by 2030 through policy reforms, net metering (5 MW active) and IPPs.
The post Vungu 30MW solar project gets sovereign guarantee appeared first on Zimbabwe Situation.