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Independent power producer Pan-African Engineering Resources (PER) has secured a $950 million loan from China to finance development of the first phase of the Lusulu thermal station in Binga, Matabeleland North Province.

After completion of the first phase, the plant would produce 600 megawatts.

The company signed an Engineering Procurement and Construction agreement with China State Construction Engineering Corporation (CSCEC) on Thursday in the capital.

Speaking at the signing ceremony last Thursday, PER chairman Stuart Perry said other financiers would be engaged since the first phase required $1.1 billion.

Perry said the project would be implemented in phases and after the fourth phase the plant would produce 2,000 Megawatts.

“We hope that part of the funding will come from Zimbabwe as Old Mutual and other financiers have expressed interest,” he said.

“The first phase should start in April next year and be completed in the first half of 2019. The rest of the phases will commence after that.”

The loan has a 15 year tenure at seven percent interest rate.

Speaking at the same occasion, Finance Minister Patrick Chinamasa said the project would assist alleviate Zimbabwe’s power woes.

“The financier needs to be satisfied that there’s a power purchase agreement between Lusulu and the Zimbabwe Energy Regulatory Authority. The two parties need to agree on a tariff as the energy will be supplied to the national grid,” he said.

“The conditions also require that Lusulu be allowed to export to regional markets when there’s a power surplus in the country. We’ll provide our support as government in that regard.

“We’re here to demonstrate the government’s support to this project which is a very important project which seeks to address the infrastructure gap in the power generation sector,” said Minister Chinamasa.

He said the project will develop the Binga area in infrastructure and at the end the area will be a tourist attraction.

CSCEC general manager for East and Southern Africa, Huang Changebiao pledged China’s continued support to Zimbabwe.

In 2012 the Zimbabwe government granted PER, a French consortium, a licence to build a $3 billion thermal power plant in the country.

The power plant is to be built in the Lusulu coal fields in Binga which are estimated to hold 1.2 billion tonnes of coal reserves.

Zimbabwe is currently facing power shortages as it is generating below 1,500 megawatts most of the times against demand of over 2,000 Megawatts during peak periods.

The country has to supplement internal power generation with imports from regional power utilities.

However, the government, through the Zimbabwe Power Company, has embarked on several projects to bridge the power deficit by expanding existing generating plants and building new ones. — Business Reporter/New Ziana.