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Harare – The Zimbabwe Power Company (ZPC) is seeking to divert $14 million it raised under the $50 million bond for re-powering the Harare Power Station, to finance completion of Kariba South Power Station, the utility’s financial advisors said.

In a circular to bond holders, the advisors said ZPC submitted a request for a change of use of the bond proceeds raised by the Infrastructure Development Bank of Zimbabwe (IDBZ) for the Repowering of Harare Power Station (HPS Project) under the $50 million bond issue (Series 2 2014B).

IDBZ said the request had been necessitated by the need for ZPC to prioritise funding for the Kariba South Power Station Expansion Project (KSPS Expansion Project) which has registered significant progress with the project being 66 percent complete as at December 12, 2016.

The advisors said there is a funding gap of $14 million on the Kariba South Power Station Expansion Project (KSPS Expansion Project) which arose from legitimate inflation adjustments on the EPC Contract for the project between ZPC and Sinohydro Corporation Limited (Sinohydro), the EPC Contractor on the project.

“Noting the significant progress on the KSPS Expansion Project to date, and delays encountered on the HPS Project which is yet to reach financial close, a critical milestone for the commencement of construction works, ZPC has requested to utilise the $11,2 million raised for the HPS Project under the $50 million bond issue in the interim to finance the CPI Adjustment for the KSPS Expansion Project which is already at an advanced stage of progress towards completion,” said the advisors.

Chinese firm Sino Hydro won the contract to expand the second largest power station in the country – Kariba Power Station – by an additional two units which will add 300 megawatts to the national grid. The Chinese government extended a loan of $320 million for the project while ZPC would cover the balance of $213 million through borrowings from development finance institutions.

Zimbabwe is facing electricity shortages with generation at 1 300MW against peak demand of 2 000MW. The Government, through ZPC, has embarked on several projects to bridge the power deficit through expanding existing power stations and building new ones.

Plans are afoot to add to units at Hwange Thermal Power station which would have a combined generation of 600 megawatts.

Zimbabwe is also working with Zambia to build the Batoka George power station which is expected to generate 1 600MW of electricity to be shared equally by the two countries when complete. – New Ziana.