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Lloyd Gumbo, Harare Bureau
ABOUT $7,2 million that Zimbabwe owes a Chinese insurance company has stalled progress on the funding agreement for the expansion of Hwange Thermal Power Station with the Chinese firm insisting that it would not guarantee the loan until Harare clears its debt.

Zimbabwe signed a concessionary loan agreement with China Export and Import Bank for the power expansion project during President Mugabe’ State visit to Beijing in 2014.

To validate the funding agreement, Finance and Economic Development Minister Patrick Chinamasa also signed another agreement with a Chinese insurance company, China Export and Credit Insurance Corporation (Sinosure) to guarantee the loan.

The agreements were further consolidated during Chinese President Xi Jinping’s reciprocal State visit to Zimbabwe in December last year where deals worth about $4 billion were penned.

President Mugabe is on record saying Zimbabwe must pay its debts to China in order to strengthen relations between the two countries.

The Hwange Thermal Power Station expansion project is expected to add 600 megawatts to the national grid from new units seven and eight.

Zesa spokesperson, Mr Fullard Gwasira said following the signing of the loan agreement in December last year, pre-commencement activities such as topographical and geotechnical surveys have already been completed.

“Financial closure has not yet been reached as the relevant consultations are being done to meet the requirements of the project,” said Mr Gwasira.

“Progress is still within the set timelines and the relevant conditions and formalities are being explored to ensure that closure is reached.

“Engineering Procurement and Construction (EPC) is expected to officially commence late 2016 to early 2017 after financial closure.”

Sources who spoke to our Harare Bureau said the Sinosure debt was the stumbling block to the conclusion of the debt.

“That is the major challenge at the moment with regards to Hwange Power Station expansion. Sinosure is refusing to guarantee the loan until Zimbabwe pays about $7,2 million that it owes that company,” said the source.

The agreements between Harare and Beijing were expected to provide securitisation framework for infrastructural and productive projects that would be funded by both the State and non-State financial institutions.

One of the four pillars of Zim-Asset is the Infrastructure and Utilities cluster which spells out a number of major projects to revive the economy by rehabilitating, upgrading and building key physical as well as social infrastructure and utilities to enable the turnaround of the economy and create business and employment opportunities.

Funding was, however, a major challenge to achieving the goals of the Infrastructure and Utilities cluster.