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China to build $3bn coal plant in Zimbabwe
CHINA
ZIMBABWE’S Rio Energy, a unit of RioZim, is to build a 2,800-MW thermal power plant (TPP) with China Gezhouba Group in northern Zim- babwe at a projected cost of $3bn.
“CGGC will develop the project and assist with the fund raising,” said Caleb Dengu, chair- man of Rio Energy, Bloomberg reported last week.
The power plant at Sengwa will be con- structed in four phases of 700 MW each, making a total capacity of 2,800 MW.
“We have coal reserves to support a 10,000- MWplantatSengwa,”Dengusaid.
A 250-km pipeline will carry water from Lake Kariba to Sengwa. The pipeline, and a 420-kVA power line, will be built by PowerChina, said Dengu.
The first phase of the project will cost about $1.2bn, he added.
The Industrial and Commercial Bank of China has given a formal expression of interest (EoI) in the project and is negotiating with Sino- sure, also known as the China Export and Credit Insurance Corp., to cover country risk insurance costs, Dengu said.
China is a major investor in Zimbabwe’s power sector.
In 2019, a consortium of China’s Power Con- struction Corp. and US-based General Electric won the contract for the 2.4GW Batoka Gorge HPP on the Zambesi River on the Zambi- an-Zimbabwean border.
GE and China Power are expected to provide the bulk of the $4.5bn funding for the project, while the World Bank and the African Develop- ment Bank (AfDB) will support them.
Sinohydro is also adding 600 MW to the
Hwange thermal power plant (TPP) at a cost of $1.5bn and 300 MW to the Kariba South HPP at a cost of $533mn.
Chinese backing for major power projects is accompanied by more Chinese debt on Zim- babwe’s balance sheet. There are concerns that relying on China will usher in a new era of debt diplomacy, with Beijing exerting increased polit- ical influence in Zimbabwe and elsewhere in Africa in exchange for debt financing.
Furthermore, China is fast emerging as the only foreign investor with an appetite for coal in Africa. Western investors, led by the AfDB, have withdrawn from coal on the continent, and are increasingly doing so in Asia too.
Zimbabwe’s operational generating capacity currently stands at 1,300 MW, short of its 2,200 MW of demand. Daily power outages have ham- pered industrial capacity for almost two decades.
A two-year drought blighted the country’s 1,050-MW Kariba South HPP by draining the reservoir, while ageing equipment at its main Hwange TPP causes incessant breakdowns and outages that see many consumers receiving only eight hours of power a day.
At the end of March, the flows on the Zam- bezi River recorded at Victoria Falls were 54% above the long-term average and way higher than last year’s flows during the same period.
The Zimbabwe River Authority said it would limit Zimbabwe and Zambia’s electricity gen- erating capacity to 275 MW each in an effort to ensure the build-up of the reservoir storage.
RioZim was spun off from Rio Tinto in 2004. London-based Rio initially retained a stake in diamond mines and Sengwa before selling those to RioZim in 2015.™
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