THE financially-crippled Zimbabwean and Zambian governments have extended a begging bowl to international donors for the construction of the $3 billion Batoka hydroelectric power station putting the entire project in jeopardy owing to the global credit crunch.
An agreement to appeal for loans was reached at a closed door meeting of the Council of Ministers at Protea Hotel in Livingstone, Zambia, last Thursday.
Initially, the two countries had agreed to invite tenders for the construction of the ambitious project under a build, own, operate and transfer (BOOT) agreement, but made an about turn on Thursday and tasked each country to mobilise its own financial resources.
The two countries now have the mammoth task of mobilising half of the funds needed to construct the power station.
Finance minister Patrick Chinamasa disclosed that the two countries would soon approach lenders to beg for some loans to fund the project.
“We agreed to abandon the proposal BOOT and instead seek loan facilities for the construction of the Batoka. We decided to mobilise financial resources from lenders,” he said.
“We are at a stage where we are updating feasibility studies that were done years back. These updates cost $6 million and the World Bank contributed to the funding of the feasibility studies.”
However, the project could stall, especially for Zimbabwe as raising $1,5 billion could be a daunting task considering the country’s “bad debtor tag” in the eyes of international lenders.
Zimbabwe is currently failing to settle its debts with the International Monetary Fund (IMF) and World Bank.
The country currently owes the IMF $124 million. It fell into arrears in 2001 and was expelled from the Fund in 2005.
The World Bank, which is owed $1 billion, says Zimbabwe should devise a comprehensive arrears clearance plan with international lenders to qualify for fresh loans.
The Batoka project was projected to be commissioned in 2021.
The project involves the construction of a dam and a hydro power plant on the Zambezi River.
The potential capacity of the site is 1 600 megawatts to be shared equally between Zambia and Zimbabwe. It is going to be constructed 54km downstream of the Victoria Falls.