Zimbabwe gives guarantees to 27 independent power producers with combined 1 000 MW projects

The government is giving guarantees to 27 independent power producers, with projects of a combined 1000MW, hoping to clear a key hurdle that has kept energy investors away and left Zimbabwe facing power shortages.

Finance Minister Mthuli Ncube announced yesterday that the government had agreed to a Government Implementation Agreement (GIA) for all solar IPPs projects. Under a GIA, IPPs will be guaranteed an economic tariff, while the Reserve Bank of Zimbabwe will ensure that they can convert their earnings to foreign currency and be able to transfer it. The GIA also carries a power purchase agreement with ZESA.

This is meant to address one of IPPs’ biggest concerns in Zimbabwe; they hesitate to invest in a market where they would have to sell power at a loss, earning Zimbabwe dollars, and not being able to take their profits out.

“A key ingredient to the successful implementation of the solar IPPs projects is a bankable GIA with an economic tariff,” said Ncube, adding the agreement includes a Project Development Support Agreement, Power Purchase Agreement, and RBZ’s undertaking for foreign currency convertibility and transfer.

“I am delighted to announce the finalisation of the GIA with these 3 components through the work of the Ministry of Energy and Power Development, Attorney General, Reserve Bank of Zimbabwe and the Ministry of Finance and Economic Development.”

Government would guarantee an economic tariff to qualifying IPPs solar projects. To qualify, they have to apply for a licence at ZERA, negotiate for a power purchase agreement, show proof of funding, and then sign the GIA.

Among the solar projects recommended for government guarantees is the 100MW Matshela Energy project in Gwanda, promoted by former Eskom CEO Koko Matshela, and a 75MW Mat South project by Sinogy, a solar company that has installed a 1.9MW plant for fruit exporter Nhimbe Fresh.  

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