Energy & Power Supply

• Sustainable economic growth is anchored on affordable, reliable and stable supply of energy to industry and households. Zimbabwe is currently facing power shortages with estimated reliable generation of about 1049 MW against an estimated suppressed peak demand of 2200MW. Currently power imports stand at around 400 MW. Industry and Commerce have struggled partly due to acute power shortages being experienced in the country. The Government of Zimbabwe has prioritised energy projects as one of the key enablers to economic growth and development. The prioritised projects include new plants and the optimization of existing plants and are expected to add additional power to the grid as follows:
• Expansion of Kariba South Hydro-electric Power Station (KSPS) Unit 7&8 - 300 MW;
• Expansion of Hwange Thermal Power Station Unit 7&8- 600 MW;
• Repowering of three small thermal power stations namely; Harare, Bulawayo and Munyati power stations- 200MW;
• Gairezi Mini Hydro - 30 MW; and
• Dema Emergency Peak Plant - 200 MW.

In line with the IDBZ mandate to mobilise resources for infrastructure projects, the Bank has to date raised US$38.8 million to fund refurbishment works at Kariba South Power Station to enhance the escrow capacity of KSPS under the expansion project loan structure from China Exim Bank. The injection of US$38.8 million into the existing plant was one of the conditions precedent for the Zimbabwe Power Company to unlock the US$535 million project funding from China Exim Bank Facility for the expansion project. It is heartening to note that as at the end of February 2016, the project was at 41% completion with full project delivery expected before end of 2018.

Furthermore, the Bank also secured a mandate from ZPC to raise US$11.2 million towards its 15% contribution of the EPC costs plus insurance cover for the Harare Power Station Repowering Project. The project is expected to be funded 85% with a concessional loan amounting to US$70.2 million from India Exim Bank through the EPC contractor. The Bank managed to raise the full amount of the required contribution on behalf of ZPC through a 2014 five year semi-annual bond issue with a coupon of 9% per annum.

Following the successful issuance in 2012 of a three year US$30 million bond with a coupon of 10% per annum required to kick start the Zimbabwe Electricity Transmission and Distribution Company’s (ZETDC) prepaid metering project, the ZETDC once again mandated the Bank to raise an additional amount of US$15 million in November 2014 in order to continue with this important energy demand side management project whilst facilitating the financial sustainability of ZETDC through enhanced collections from energy consumers now under a pre-payment platform. The Bank successfully raised the US$15 million required by ZETDC in 2015 through a five year semi-annual bond issue with a coupon of 8% per annum.

The total US$45 million raised by the Bank facilitated ZETDC to connect more than 500 000 customers to the prepaid metering system by end of 2015. The project has both economic and commercial benefits that include: the conservation of energy by consumers; increase in revenue collection from pre-paid consumers; reduction of non-performing debts; improved credit worthiness of ZETDC through a stronger balance sheet; increased capacity by ZETDC to undertake capital projects on grid and distribution infrastructure maintenance which go towards reduction of technical losses; ability to finance imports and reduction in non-technical losses among others.

The Bank issued the following bonds to support energy projects since 2012 as shown in Table 2:

The performance of these bonds has helped drum up investor confidence in support of the IDBZ infrastructure bonds instruments and the underlying quality projects needed to fulfil the Bank’s mandate.