A new power purchase agreement has been signed for Zimbabwe’s Gwanda solar power plant.
The agreement was signed between the Zimbabwe Electricity Transmission and Distribution Company (ZETDC) and Matshela Energy Limited, an independent power producer in South Africa. In a statement issued on August 4, 2022, Matshela Koko, managing director of Matshela Energy and a former Eskom interim chief executive, confirmed the signing of the deal.
According to section 42 of the Electricity Act, Matshela Energy is authorized to construct, own, operate, and maintain the 100-megawatt Gwanda solar plant, in Matabele land South Province, as well as the associated battery storage facility with a capacity of 40 MWh.
This accomplishment by Matshela Energy, the Zimbabwe Energy Regulatory Authority (ZERA), ZETDC, the Department of Energy and Power Development in Zimbabwe, and other involved parties is remarkable.
As soon as the power purchase agreement is signed, according to Koko, the company will work to reach financial close in accordance with ZERA’s timelines.
Also, the Government Support Agreement must be completed within the next 180 days from the date of signature, according to the power purchase agreement that was signed. According to Koko, the parties involved are confident that the Government Support Agreement would be completed in the allotted time.
Gwanda solar farm in Zimbabwe receives US $52m guarantee
Gwanda solar farm which is part of a series of Zimbabwe’s national strategic power projects, has received a US $52m guarantee for the 100MW envisaged to close the country’s acute shortage of power.
Chinese electrical engineering group CHiNT Electric is willing and ready to provide a guarantee covering 30% of the engineering, procurement, and construction (EPC) aspect of the contract.
In March this year, the solar project was not making progress due to the project developer facing fraudulent and corruption charges.
The Chinese firm, that upon receipt of the advance payment demand guarantee, ZPC contractually has to effect payment equivalent to 30% of the EPC project cost.
The company’s Vice President, Dr. Lin Bosheng, told the contractor, ZPC’s acting managing director Josh Chirikutsi that CHiNT wanted to make an advance payment guarantee immediately after ZPC released part of EPC funding.
Financial closure for Gwanda solar farm
According to Dr. Bosheng, this was provided for in clause 5b of the Contract Agreement for the project.
The implementation of the solar project will also receive a massive boost following President Mnangagwa’s State visit to China.
The company notes that arrears from the previous regime’s guaranteed projects have scuppered financial mobilization and delayed the project.
“In addition to the efforts by our counterpart to secure funding locally and the achievement of financial closure, we will assign CHiNT to obtain an advance payment demand guarantee provided for in terms of Clause 5b of the (Gwanda solar farm EPC) contract agreement.
The advance payment by ZPC will be accordingly utilized. Among other purposes, funding the facility costs and fees. The advance payment will be for the completion of any outstanding works.
Zimbabwe calls for cancellation of Gwanda solar project
A parliamentary committee in Zimbabwe is calling for the US $202m Gwanda solar project tender to be withdrawn and former ministers to be prosecuted if they flouted tender procedures in awarding the contract following claims over corruptions acts.
According to the committee, the boards of ZESA Holdings and the Zimbabwe Power Company (ZPC) failed to follow good corporate governance practices in awarding the contract.
“The committee was informed that the ZPC managing director Noah Gwariro acted without consulting the board because of pressure from politicians that included former ministers of energy, Mavhaire, Mangoma, Undenge, and Mutezo. However, Mutezo appeared before the committee and denied the allegations,” said committee chairperson Temba Mliswa.
“The money paid to Intratek should be recovered after investigations are completed and the award of the tender to Intratek needs to be rescinded in light of violations of the Company’s Act and the repealed Procurement Act,” he added
Intratrek paid in advance
The tender for the 100MW Gwanda Solar Project was awarded to Intratrek Zimbabwe in 2015. After winning the bid, Intratrek is reported to have received US $5,6m in advance for preparatory work on the solar plant. Former energy minister Samuel Undenge is said to have communicated directly with the board to influence payments to the company’s managing director, Wicknell Chivayo.
“It was clear that Undenge used to have direct communication with ZPC management and was the one said to have instructed the ZPC board to make payments to Chivayo without having to provide a bank guarantee,” said Mliswa.
Zimbabwe’s Gwanda solar plant project receives US $14m
The Gwanda solar plant project in Zimbabwe has received the US $14m from African Transmission Corporation (ATC) Holdings to finance part of phase two of the project.
According to the agreement, the funds will finance the first 10MW of the project under a phased construction model. According to the Herald, the financing from ATC presents an alternative source of funding for the Gwanda project, which has been delayed by financial resource constraints and also further weighed down by the contractual dispute between the parties, which has spilled into the courts.
Gwanda solar plant project
The Gwanda project developers, Intratrek Zimbabwe, said that progress on the Centragrid project attested to ATC’s capability to also progress Gwanda, which will be developed in phases.
“The 10MW, upon commissioning, would act as a successful precedent upon which financing for the balance of 90MW would be mobilized,” said Intratrek.
The project, jointly funded by the European Union, United Nations Development Programme, OPEC Fund for International Development, and Global Environmental Facility is being implemented by Practical Action, SNV, CARD, and Dabane Trust, with the support of government ministries and departments.
Gwanda Solar Plant Project remains in limbo due to legal wrangles
The Gwanda Solar Plant Project remains in limbo due to legal wrangles that have stalled its implementation. The dispute revolves around the inability of the contractor to deliver the project. The contractor has sighted countries’ sovereign debt woes which have negatively affected efforts to raise project financing.
The Gwanda Solar Plant project involves the construction of a 100MW solar power plant. Phase one of the project saw the 25MW Centragrid Photo Voltaic project in Nyabira, enter commercial operations in August 2019. Phase two of 22.5MW will commence shortly once the funder’s due diligence is completed.
Upon completion, around 2,800 households in Gwanda South, Zimbabwe, are set to benefit from the solar power project which will power three irrigation schemes, a clinic as well as five business centers.