Work at RioZim’s $2,2 billion Sengwa thermal power plant has kicked off in earnest amid indications that at least four key feasibility studies are expected to be completed this month.
RioZim has engaged PowerChina for the construction of the 2 000 megawatt (MW) thermal power station in Gokwe North, which has been in the pipeline for more than 30 years.
Power China subsidiaries Sino Hydro recently completed Kariba South expansion project, which added 300MW into the national grid and has commenced work at Hwange 7 and 8 that is expected to generate additional 600MW.
Timeline documents seen by this publication show that officials from the Chinese State-owned firm were in Zimbabwe last month to sign exclusivity agreement with RioZim and both agreed that an equipment, procurement contract (EPC) and operations maintenance agreement should be sealed by May 2019.
This will be followed by the construction of a 700 megawatt (MW) plant under the project’s first phase. The document further indicated that a power plant feasibility report, coal mine feasibility study report, and a water pipeline feasibility study and bill of quantities should be completed by March 20, this year.
“A shareholders agreement will be signed between the two companies in the third quarter of this year and we also expect the project’s financing model to be completed by October 30, 2019,” said people familiar with the matter.
“By this time next year PowerChina would have significantly covered a lot of ground on this project,” the sources added.
RioZim is being advised by CDF Trust and Consulting BV on the mega project while PowerChina is being advised by Transfrontier Investments and AMG Global.
The Sengwa power project has been in the pipeline since the 1990s and has an attractive option, with guaranteed supply of coal from RioZim’s concession, which has in excess of two billion tonnes of the fossil fuel. Feasibility studies conducted in 1997 revealed that about two billion tonnes of the coal are proven reserves expected to feed the thermal power station.
Market experts believe that if the project, which entails development of a coal mine, power station, water pipeline to the power station and a power transmission line to the national grid, comes to fruition it would help Zimbabwe to deal with its intermittent power cuts, with excess electricity being exported.
The southern African country, which has seen power consumption fall on the closure of fertiliser plants and chrome smelters, still imports electricity from neighbours like Mozambique and South Africa to avoid outages that plagued industry for over a decade between 2007 and 2017.
Zimbabwe currently produces just above 1 000MW against demand of 2 200MW. Several international firms from India, China, Namibia and South Africa among other countries expressed interest to develop the thermal power plant after 2009, but nothing concrete was achieved.
The latest development also comes at a time when construction of the $1,4 billion Hwange Expansion Project for Unit 7 and 8 has started in earnest, after Energy minister Joram Gumbo laid the foundation stone in Hwange on Friday.
“The process of laying the foundation signifies the commencement of real construction works in a journey that will take us to the promised land of security of electricity supply as we set our sights towards the successful implementation of Vision 2030 which will transform
Zimbabwe into an upper middle class economy,” he said.
Gumbo noted that the expansion project is a key economic enabler as it would positively impact on the economy through the employment of in excess of 3 000 people and enhance skills transfer.
Already, 450 people from around Hwange have been employed.