Thread: Zimbabwe bankrupt: The facts

Remember this story three years ago? Nampower rushing to help the brothers in Zesa to fix Hwange and in return the Zimbabweans export electricity back to us? Well, back then some forum members already expressed their scepticism, and it appears the chicken have come home to roost - at our expense.

This may not be the final chapter in this saga, but boy oh boy was the writing on the wall. What is patently clear is that Nampower was strong-armed into this by the politicians to show solidarity with the ZANU-PF and Mugabe regime, to try and prop them up. This was not done for commercial reasons. They should never have concluded this deal, but I suppose we don;t learn, do we? Will it have any consequences? We shall see, as they say but judging by the latest news this "investment" will not bear fruit:

Govt, Namibia Power Deal in Limbo
14 January 2010

CONFUSION surrounds the Zimbabwe and Namibia power deal following a reported directive this week by Energy minister Elias Mudzuri that Zesa should stop exporting electricity to NamPower. Namibia advanced Zesa US$40 million in 2007 to upgrade its Hwange Thermal Power Station in return for 150 megawatts of electricity for five years.

The state media quoted Mudzuri saying he wanted the deal "renegotiated so that only power generated at Hwange Thermal Station is exported to Namibia".

In a telephone interview with The Namibian on Tuesday, Mudzuri said he instructed Zesa to only export power from Hwange, and from nowhere else, to Namibia.

NamPower on Wednesday evening said it "has so far not received any official communication from Zesa confirming the media reports that Mudzuri had ordered Zesa Holdings to stop electricity exports to Namibia until normal power generation at Hwange Power Station is restored saying it was business as usual between Zesa and NamPower".

NamPower's marketing and communications manager John Kaimu told The Namibian in an e-mail response that "the deal to supply 150 megawatts is between Zesa and NamPower and not between Hwange Power Station and NamPower".

He later issued a press statement, referring to a "firm power purchase agreement in terms of which NamPower would be supplied 150 megawatts by Zesa for a period of five years".

The Herald quoted Mudzuri as saying: "That deal was for Hwange only and Zesa should be able to say to them, 'We cannot supply you with electricity if Hwange is down'. We have to give them electricity from Hwange".

Confusion over the issue was heightened when the Zimbabwe High Commissioner to Namibia, Chipo Zindoga, faxed a statement to newspapers, saying there was no truth in Zimbabwe's media reports.

Mudzuri told The Namibian on Tuesday that Hwange sometimes could not generate enough electricity to export to Namibia.

In the past, Zimbabwe had imported power from the Cahora Bassa hydroelectric plant in Mozambique, and exported it to Namibia at a loss.

"We can't have a situation where we import to export. In the past, we have never stopped supplying them (Namibia) with electricity even when Hwange was down. This meant we were importing and then re-exporting and I am saying that is not proper," Mudzuri, said.

NamPower on Wednesday night said it had agreed with Zesa "on the modalities in which the loan would be advanced and managed, and the eventual export of power to Namibia once the first unit at Hwange has been refurbished".

"The parties have further agreed to the terms and conditions covering events of default, should these arise and both parties, that is NamPower and Zesa, are satisfied. The agreement contains confidential information which cannot be divulged to the public as we are bound by confidentiality clauses," NamPower said.

NamPower's chief operations officer, Bertholdt Mbuere ua Mbuere, said the agreement between the power utility and Zesa was a commercial one, and that the cancellation of such an agreement would carry penalties.

Up to US$2 billion is required to install new equipment and expand production at the country's two main power plants in Hwange and Kariba to meet increased industrial and domestic demand.

Zimbabwe has been experiencing debilitating power-cuts due to the declining capacity of its ageing power plants, which have been starved of new investment as the country battles severe foreign currency shortages.

Businessdigest understands that the deal between NamPower and Zesa states that Zimbabwe will "meet its other part of the bargain" regardless of the electricity generation in the country.

"If they (Zesa) cannot generate the power to supply us, they still must find the power elsewhere to fulfil their part (of the agreement)," NamPower managing director Paulinus Shilamba was quoted saying.