The Zambezi River Authority (ZRA) has revealed that a consortium which clinched a deal to implement the 2 400-megawatt (MW) Batoka Gorge Hydro-Electric Scheme (BGHES) was struggling to mobilise funding for the project which is bad news for the local industry.
Industry operations have been severely affected by power cuts, and this has been pushing the government to prioritise the completion of Batoka Gorge power station to meet higher electricity demand projected as the economy rebounds.
Nevertheless in its 2021 annual report released last week, ZRA said the Consortium of Power Construction Corporation of China Limited and General Electric indicated that banks had steered clear of the massive asset to avoid risks.
Controlled by both Harare and Lusaka to manage the Zambezi River, ZRA is a special agency , and said the consortium had requested credit enhancement support from the two countries.
“The developer (the Consortium of Power Construction Corporation of China Limited and General Electric) completed all pre-development activities which included additional geo-technical studies, aerial surveys on and around the project site, compilation and submission of feasibility studies and proposal,” ZRA said.
“In the proposal, the developer requested credit enhancement support having faced challenges in mobilising funds from potential financiers due to the sovereign defaults of the contracting States.
“In addition, the developer sought tax incentives from the contracting States; 100% power off take by (power) utilities (Zesa in Zimbabwe and Zesco in Zambia) and a project investment cost of US$4,9 billion resulting in tariffs of 8,4181USc (US cents) per kWh (kilowatt hour) and 8,0862 USc per kWh in Zambia and Zimbabwe, respectively,” ZRA noted.
ZRA added that it engagements which were continuing with Harare and Lusaka “to ensure the success of execution of this project”.