Energy: Investment In Existing Power Infrastructure Yay or Nay?
By Almot Maqolo
HARARE – Zimbabweans are subjected to regular power cuts because of the inability of Zesa Holdings to meet demand, and the state-owned company is struggling to pay for privately produced power because of a shortage of foreign currency.
Power cuts have now been a thing of the past, despite a few breakdowns which were swiftly repaired in a day or two, and not enough to disrupt industry. Now the nation is experiencing darkness for longer hours. Only 1,103 MW of the 2,045 MW total installed capacity is now operational, compared to a reported peak demand of 2,200 MW, increasing the country’s reliance on imported electricity to make up the difference.
The government’s initiative to revive idle mines is expected to increase demand for electricity from mining and industry, which continue to be the leading consumers of the fuel. Realizing the need for improving power supplies, the country has been on an aggressive drive to resuscitate existing power stations as well as expand their operations. This comes as demand for power to light the mines in the country is expected to double as well as an increased rural electrification drive.
The Deka project, which is funded by a USD $48.1 million Line of Credit (LOC) provided by the Government of India to the Government of Zimbabwe, has begun to receive various components, according to the Zimbabwe Power Company (ZPC). It is expected to be completed by the end of March 2023, having begun on October 1st, 2021.
The project’s scope includes building a new 42 km, 960mm diameter pipeline with independent cathodic protection from Deka High Lift pump station to Hwange Power Station, as well as providing spare motors, pumps, and parts for Deka Low Lift and High Lift pump stations. It also includes renovating the ZINWA Water Treatment Plant in Hwange and providing three tap-off points for raw water supply.
For this purpose, the first shipment of 30 trucks transporting the pipes to Hwange will be cleared at Forbes Border Post this week, while the first batch of 3 555 mild steel pipes presently being offloaded at the Beira port is anticipated to enter the nation on July 8th, 2022.
ZPC said in a statement. “This is another achievement which is expected to immensely contribute to the key aspirations of the National Development Strategy (NDS1) and Vision 2030, which are targeted to immensely contribute to achieving energy self-sufficiency.”
The purchase of local goods and services, including surveys, general civil works, inland transportation, pipe laying and jointing, and pipe hydro testing and commissioning, has so far cost a total of US$13.7 million. This investment has significantly aided socio-economic development.
In order to increase water supply at Hwange Power Station in conjunction with the installation of the two new units, which will add 600MW to the national grid, the project is being carried out concurrently with the Hwange Unit 7 and 8 Expansion project.
With 18 Independent Electricity Producers (IPPs) now in operation, 8 being built, and 54 more having been given licenses, private investment in power generation has been gradually increasing. The overall installed capacity of the category is now 70MW, so there is still a long way to go.
Advisory firm IH Securities said the power situation in the short term is set to persist as upgrades are only expected to kick in from the second half of the year and functional capacity is set to be outpaced by growing demand.
“This poses significant downside risk to growth prospects and ultimately increases the cost of doing business given oil price shocks in the international market,” it said. Ageing power facilities, transmission losses, and low tariffs in relation to production costs have all contributed to the deteriorating electricity situation in Zimbabwe over time.