The Sunday News
Fairness Moyana in Hwange
Independent Power Producers (IPPs) have called on Government to ring fence foreign currency specifically targeting them in order for timeous implementation of projects.
Briefing the Minister of Energy and Power Development, Cde Soda Zhemu during a tour of the 5MW photovoltaic solar plant in Mabale, Hwange district on Thursday the co-founder and Chief Finance Officer of Solgas Energy, Mr Tafadzwa Muchinda said challenges in accessing the required foreign currency from the RBZ auction system was stifling implementation of projects.
“Construction of this power plant started in November 2020 so ideally from the day that you start construction you are supposed to have finished within a period of nine months which have since elapsed. The reasons are firstly, issues to do with flow of payments, we applaud the Government for giving us an hear in terms of participating on the auction system but that participation is quite limited depending on the availability of funds for IPPs.
From the ministry side we are appealing to you to do more to ring fence forex specific for IPPs then the development of these projects will be a lot more faster. With energy projects panels, invertors and other equipment we have to import from China so we need most of the support in terms of equipment and as long as we are not able to meet our payments we will be doing 5MW every 12-18 months but if we push for the forex collectively work is done much faster,” said Mr Muchinda.
He said that as a result of challenges in accessing forex they encountered challenges in meeting their contractual obligations forcing them to stagger payments to the contractor over a period of two years.
“In terms of the first payment to the contractors you find that the contract was stipulated in such a way that we are supposed to have paid within six months from the first payment but we were not able to guarantee the flow of those payments. Therefore what we were supposed to pay in six months we have managed to pay within a stretched period of two years because of unavailability of foreign currency.
Typically you bid for US$500 000 but you are allocated a US$100 000 and this has really affected us. If we are able to be ascertained a certain portion of the forex as IPPs we will be able to quickly implement these projects such that we are commissioning every six months.”
Work on the 5MW plant including the construction of a 28km 33Kv transmission line is almost complete save for components such as an interconnector that is enroute from China with trial runs conducted by ZETDC expected to begin in two weeks before actual commissioning. The first phase of the project, which costs US$7,3 million, is expected to go online in August.
The company which is wholly owned by young entrepreneurs and funded by Old Mutual recently got a license to expand its power plant at its Mabale site by an additional 10MW and intends to establish an initial 5MW solar plants in very province.
“It’s worth mentioning the savings that government will get to make in terms of electricity importation if we can deploy perhaps one 5MW power plant within each province in the country. That will be 50MW if we are doing such plants in each province and the savings from government itself, that is importation and saving forex becomes huge. Just at a capacity of 5MW while saving the country US$1.5m for the next 25 years, every year in terms of forex when importing power.
“The more that we are able to put out there the more that we don’t have put up with serious Eskom bills (for imports) because what we are doing when we pay them is that we are actually paying private IPPs to produce the power and sell it to us through Eskom. Therefore, if we are able to implement it here then we save the forex, create jobs and make sure the local community also benefits from these projects,” said Solgas Energy’s Chief Executive Officer and co-founder, Mr Kingston Kamba.
At the height of its operations the company which was founded in 2015 by Mr Kamba (42), Mr Muchinda (33) and Mr Petros Kazungu (38) who is also the Chief Operations Officer employed 350 locals. It has donated solar panels to local communities and established a bee-keeping project.
The minister who also toured Zimbabwe Zhongxin Electrical Energy (ZZEE) at the outskirts of Hwange town commended the coming onboard of the two private players to augment government efforts in addressing the power shortages gripping the country.
“We are happy about developments happening here and we are very much expectant of commissioning. This will be the first thermal plant as the existing ones are owned by Government. Let’s work closely with ZETDC so that all our equipment is compliant with their requirements. As a locally founded company you have demonstrated that you didn’t acquire a licence for speculative purposes but to contribute to ending the crisis we have as a nation. Getting funding locally is testimony of favourable policies we have and this is going to open ways for more projects and speaks volumes of what can be done by local people to bring solution to our problems. Government will continue to support private sector partnerships that seek to compliment government efforts in improving livelihoods,” said Zhemu.
He said such initiatives were going to assist the country in ending load shedding within the next two years through various intervention initiatives as directed by President Mnangagwa.
ZZEE is in the process of a three-phased construction of a 320MW coal-fired power plant with an initial 25MW of electricity out of the 50MW under the first phase expected to be fed into the national grid in two weeks.