Page 4 - AfrElec Week 28

AfrElec COMMENTARY AfrElec
Batoka Gorge hydro deal deepens Chinese footprint in southern Africa
Zambia and Zimbabwe have con rmed that China will lead construction of the 750MW HPP on the Zambesi, writes Richard Lockhart
CHINA
WHAT:
GE and China’s Power Construction Corp. are to begin construction in 2020
WHY:
Zambia and Zimbabwe have major power supply crises and rising demand
WHAT NEXT:
The two countries are raising their exposure to Chinese debt, despite the involvement of Western technology and MMD support
A consortium of China’s Power Construction Corp. andUS-based General Electric has won the contract for the 2.4GW Batoka Gorge hydro- power plant (HPP) on the Zambesi river on the Zambian-Zimbabwean border.
In what was described as an “emergency decision,” two governments chose the contrac- tor three months early in a bid to push the pro- ject forward and to begin generation as soon as possible.
e widely expected choice of GE and Power Construction Corp. which was rst made public in June by Zimbabwean President Emmerson Mnangagwa, means that Chinese investment is continuing its domination of the power sector in both countries.
e new HPP is seen as a key driver of indus- trialisation in both countries and will be needed to meet rising energy demand in the long term.
Mnangagwa said at the time that “it’s critical that we move fast on that front, because as we industrialise we need electricity.”
Moving quickly will mean that remaining feasibility studies must be completed by the end of 2019, with ground being broken on construc- tion in 2020.
For China, the deal deepens its in uence in the southern Africa region and increases Zambia and Zimbabwe’s dependency on Beijing’s nan- cial support.
Decision
e ZRA said in its decision on July 12 that the Batoka Gorge project needed to be pushed for- ward because of low rainfall in recent years and
the current power crisis. e decision is intended to ensure the energy security of the two nations. Indeed, the agreement, signed by the Zam- bian and Zimbabwean energy and nance min- isters, included a joint commitment to ensuring that the ZRA and the two countries’ utilities remained sustainable and capable of discharging
their mandates.
At the start of June, the ZRA made public a
shortlist of three groups in the running for the build-operate-transfer (BOT) contract. e list included the winners, Salini Impreglilo of Italy and a joint venture of China’s Three Gorges Corp., China International and Water Electric Corp. and China Gezhouba Group.
e BOT nancing model requires private input into the project’s $4.5bn funding require- ments. Both GE and China Power will pro- vide the bulk of the funding, supported by the World Bank and the African Development Bank (AfDB).
Future power needs
e investment language hides a real power cri- sis in the two countries.
Zambia’s current installed capacity stands at 2,900MW, while is demand forecast to grow by 5.4% annually to 5,508MW by 2035, accord- ing to a World Bank 2018 report on the Batoka scheme.
In Zimbabwe, current capacity theoreti- cally stands at 2,016MW, well below current demand, while imports from South Africa have fallen to 50MW because of $20mn of unpaid bills to South Africa and Mozambique. The
It’s critical that we move fast on that front because as we industrialise we
need electricity
Zimbabwean President Emmerson Mnangagwa
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w w w . N E W S B A S E . c o m Week 28 17•July•2019