ZIMBABWE Power Company (ZPC) and NamPower have signed a $150 million power purchase agreement to securitise a loan meant for the expansion of the hydro-electric plant in Kariba.
ZPC will repay the loan through an export of power to NamPower starting in the first quarter of next year.
An executive with ZPC confirmed the signing of the agreement.
“We need to raise $150 million for Kariba South extension and we will get the money from Standard Bank. We need to raise a power purchase agreement to securitise the loan with a reputable organisation,” the official said.
“We will sell the power to NamPower and they will pay as they consume the power. We expect to start giving power to Nampower in February next year and latest will be April 2015. The 80MW will be at a load factor which means on average it will be 40MW.”
Chinese firm Sino Hydro won the contract to expand the country’s second-largest power station by 300MW at a cost that has risen to over $500 million from the initial $319 million.
The expansion is expected to be completed in 2017.
Sino Hydro also won the contract to add two units of 300MW each at Hwange Power Station. The project is estimated to cost $1,5 billion. It takes three-and-a-half years to complete.
ZPC, a subsidiary of Zesa Holdings, is in charge of power generation at Hwange, Kariba, Munyati, Harare and Bulawayo power stations.
This is the second time that ZPC had signed a power purchase agreement with NamPower in seven years.
In 2007, ZPC signed a power agreement with NamPower in which the Namibian power utility gave Zesa $40 million to refurbish Hwange Thermal Power Station.
The debt was repaid through the export of 100MW during peak periods and 150MW off-peak to Namibia daily for five years.
Zesa is owed over $700 million by customers who are failing to pay off their debts due to economic challenges bedevilling the country such as unemployment, liquidity crisis and company closures.
The country is facing power challenges resulting in load-shedding being a common feature.
The power utility says the expansions at Hwange and Kariba would be able to end the power crisis.