ZETDC cancels Dema power plant energy deal

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The Zimbabwe Electricity Transmission and Distribution Company (ZETDC) has confirmed its decision not to procure more energy from Dema power plant. The decision has been taken to minimise the impact of the tariff on the cost of the energy mix.

To get an average price, the Dema power plant tariff is blended with cost of electricity from other local power plants and price of the imported energy. The power plant project is being executed under the supervision of a local firm Sakunda Holdings.

According to Julian Chinembiri, ZETDC Chief Executive Engineer, the company concluded the power purchase agreement for the supply of 100MW of power given that the company is not financial capable to absorb the full output of 200MW of power from the Dema power plant.

In the short-term, the project is an initiative to ameliorate acute power shortage. However, Zimbabwe is expected to generate additional power by 2018, a time when the current new projects begin to feed the national grid.

Other diesel powered power plant output can be sold to other consumers in the region. In the meantime the power purchase agreement allows Dema power plant to supply 100MW of power from the plant as ZETDC has no plans to purchase more electricity from the plant.

Zesa Holdings, the transmission and distribution unit of power utility, ZETDC is currently procuring power from the Dema diesel power plant at 15,45/KWh. The Zimbabwe Energy Regulatory Authority (ZERA) has declined the proposal for the tariff hike on grounds prevailing the economic situation and efforts by the Government to expand the generation capacity.

Through ZESA Dema project was suggested as an alternative emergency power to allow the government to complete the capacity extension of projects at Hwange and Kariba South. The expansion had been designed to resolve the country’s debilitating power deficit and feed additional 900MW to the national power grid.

In order, to be able to generate enough revenue to meet operational and capital project needs, ZESA had requested permission to increase the electricity tariff from the current average rate of 9,83c/KWh to 14,69c/KWh.

However, Zimbabwe requires 1 400MW against internal generation capacity of 1 000MW. The current demand is being met through imports from Mozambique (Cahorra Basa), Zambia (Lusemf prevailing economic situation and efforts by Government to expand generation capacity.