Investors must support regional power projects

05 Apr, 2017 - 00:04 0 Views
Investors must support regional power projects

The Chronicle

Sun sets behind a power tower near a building in New Delhi

As economies in the Sadc region continue to grow, relevant investment in building supporting infrastructure is important.

Some infrastructure in the region has outlived its design life. This has compromised the facilities’ efficiency and effectiveness. In other cases, the infrastructure has been overtaken by the growth of national populations, industry and commerce.

One area that has lagged behind is power generation. As a result of this, Sadc has battled a deficit since 2007. This has forced power utilities in the regional bloc to institute drastic measures to save the available electricity and spread it around.

The Southern African Power Pool (SAPP) has an installed generation capacity of 58 000 megawatts and of that output about 47 000MW is operating against a demand of around 53 000MW. This yields an operational deficit of around 6 000MW.

Sadc governments are responding to the power deficit by investing in new generating plants — a mix of hydro, thermal, solar, biogas and others.

Projections are that by 2022 and if ongoing investments materialise, the region would have achieved energy security.

Zimbabwe, for instance, is working, with financial support from China to expand its thermal plants at Hwange, Bulawayo and Harare.  Expansion work is also underway at the Kariba hydro plant, with financial support from China as well. A few independent power producers are also taking part with tenders already awarded for some to build solar farms in Matabeleland South and Midlands provinces as well as small hydro plants at various dams countrywide.

This is very commendable, but one key project for Zimbabwe and Zambia and the region at large is the Batoka Gorge Hydro-Electrical Scheme. It will be built on the Zambezi River at a cost of $4 billion to generate 2 400MW. It is such a significant project given that alone, the Batoka plant would, when complete, generate enough to meet Zimbabwe’s peak demand of 2 400MW.

Pursuant to that goal, the participating countries hosted an investor conference in Livingstone, Zambia on Thursday last week. Ministers from both countries, representatives of international construction firms and potential financiers from across the globe attended the conference.

The World Bank is funding a fresh feasibility study of the project and in the next few months it should go to tendering stage with implementation expected to begin sometime next year.

Officially opening the conference, Zambia Vice President Mrs Inonge Wina, said the contracting parties had political will and commitment at the highest levels.

“We have in the two countries liberalised the market in the energy sector in order to allow private sector participation. We are further committed to ensuring that the price of power is cost reflective to accommodate full recovery of investments by the investor community. As governments we look forward to your support which will enable commencement of this very important project for the benefit of most of the countries in the southern and east African region. Our two countries will always endeavour to work together on projects of mutual benefit because of our long cordial relationship that has existed for many years with regard to the management of our water bodies. History is there to be told, and we are, therefore, optimistic that any project of this nature between the two countries shall always give us the intended results for the continued benefit of our people including those of our neighbours.”

We are optimistic that the investor conference will attract the necessary interest so that work begins as soon as possible.

This is a project of immense potential which will benefit both countries and should guarantee a decent return on any investment to be poured in. It will also further stabilise power supply for both countries. Demand for electricity is rising as economies in the region grow which means that there are no risks of investors putting money into what will turn out to be a white elephant.

As Zimbabwe and Zambia build new plants and other countries in the SAPP do likewise, we are optimistic that requisite investment will also be put into energy transmission infrastructure. This is very critical because official statistics indicate that last year, 66 percent of the energy that was available for trading in Sadc could not be traded due to transmission constraints.

Energy and Power Development Minister, Dr Samuel Undenge, highlighted the need for transmission infrastructure recently in an address at a SAPP management committee meeting in Bulawayo.

“Though there is notable progress in implementing generation projects, the same cannot be said for transmission projects. Transmission projects are critical to evacuate the power from generation sources to various load centres within the region,” he said.

We acknowledge work that is being done such as the MoZiSa line linking Mozambique, Zimbabwe and South Africa, ZiZaBoNa to connect Zimbabwe, Zambia, Botswana and Namibia. However, the fact that there is high level concern means that the region lacks sufficient transmission infrastructure to move the energy available.

In addition to building transmission infrastructure, we think it is also important for the region to generate more affordable energy. The average cost of US$0.14 per kilowatt-hour looks on the high end but we understand that this price must be below the cost of generating that power, estimated at US$0.18 per kilowatt hour. We feel technocrats have a duty to work out how electricity can be made available at more affordable cost for our growing economies and poorly resourced populations.

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