US$20 million solar project on track
As Zimbabwe seeks solutions to its estimated 1 000 megawatt (MW) energy deficit, one of the country’s licenced independent power producers (IPP), Utopia Power Company Limited, has secured US$20 million funding to construct a 15MW solar power plant at Bromley, about 40 kilometres east of Harare.
Construction is expected to start on March 1, 2018 and completion is set for November in the same year.
Although The Financial Gazette could not establish who the funders of project are, it has established that the IPP will be funded through both debt and equity financing from large regional and local investors.
There are suggestions that the Industrial Development Corporation of South Africa and Old Mutual Zimbabwe could be some of the major funders.
The Zimbabwe Energy Regulatory Authority (ZERA) recently approved, through the Zimbabwe Electricity Transmission and Distribution Company, Utopia Power Company’s tariff application and power purchase agreement.
Utopia Power Company’s founder, Shongwe Ndoro, who refused to give details on the $20 million deal, said: “The recently announced concessions for the energy sector in the 2018 budget statement are very encouraging to us as investors as we move to effectively address the chronic energy shortage in Zimbabwe.”
The 2018 National Budget, which was recently presented by the Minister of Finance and Economic Planning, Patrick Chinamasa, provides for a five-year corporate tax holiday for investors in the energy sector and has removed the 51/49 percent requirement in the Indigenisation Act.
“These policy directives under the new dispensation make investing in the energy sector very attractive and they encourage foreign direct investment; thereby making Zimbabwe a competitive investment destination.
We are encouraged by continued government support which has created a conducive business environment. This will accelerate the implementation of power projects, particularly in the renewable energy sector,” said Ndoro.
Utopia Power Company plans to expand its capacity to add on to the Bromley plant’s contribution to the national grid.
“In this regard, plans are at an advanced stage for additional phases at various locations across the country. This will increase our renewable energy generation capacity to over 200MW. We expect to finish construction of these projects within 36 months.”
Utopia Power Company’s entry into the energy sector is set to facilitate the transfer best of class solar technology and skills.
“We are also focused on positioning Zimbabwe for a cleaner, greener future while strengthening the nation’s capacity to mitigate the effects of climate change as well as build resilience to the impacts of global warming.
In addition, the increased generation capacity that we will bring to the economy will also put the country on a sound footing for increased industrial and agricultural production, and increased employment opportunities,” said Ndoro.
By June last year ZERA had licenced more than 20 IPPs who, however, had no access to funding to do the actual work.
ZERA chief executive officer Gloria Magombo was at the time quoted as having said: “Our market has got very serious liquidity issues and for most of the power projects to move from prefeasibility they need access to funding for project preparation.” The Financial Gazette