HomeBusiness DigestZim pays interest on US$355m China Exim Bank loan

Zim pays interest on US$355m China Exim Bank loan

Zimbabwe has made several interest payments to the China Exim Bank for a US$355 million loan extended to the southern African nation to finance expansion of its Kariba South Power Station, an official has said.

The Source/Staff Writer

The project, which is being undertaken by Chinese firm Sino Hydro, is expected to add 300 megawatts to the current 750MW, with commissioning set for the first quarter of 2018. Sino Hydro was awarded the contract in 2013 although the agreement for the loan was signed in 2012.

Energy Secretary Pattison Mbiriri told independent online business and financial news service, The Source, on Wednesday that two interest payments of close to US$2 million had been made with the next payment due in September.

“We are already paying interest during construction for Kariba 7 and 8. The first interest payment of
US$575 686,20 was made on 19 January and the second one of US$1,164,577.65 was made on 8 July,” Mbiriri said.

He said the next payment is estimated to be in region of US$1,6 million. Work on the project is on schedule with tunnel drilling to power houses under way.

Zimbabwe’s generation capacity recently improved marginally by 100MW to 1 300MW after reconditioning works on the country’s ageing thermal power plants in Harare, Bulawayo and Munyati. However, with a daily demand of 2 200MW the country still faces acute power shortages.

Expansion of Kariba South is the centre of an ongoing investigation in Botswana. As reported by this paper last week, the Botswana government’s investigation of legislator Samson Guma Moyo, suspected to have corruptly received payments from Zimbabwe’s US$533 million Kariba South power extension project, has been widened after the Botswana Unified Revenue Service (Burs) launched its own investigation.

Moyo, a Motswana with Zimbabwean roots and strong connections to government and Zanu PF bigwigs, was hauled before the courts on bribery and corruption allegations following the discovery of a series of suspicious payments to him running into more than US$10 million from the Zimbabwean project.

In his defence, Guma, through an affidavit, has explained that the huge sums of money paid in his accounts were for services provided to Sino Hydro.

Questions have however been raised over the cost structure and escalation of the project with former energy minister Elton Mangoma and ex-finance minister Tendai Biti, who were part of the team that negotiated the deal during the inclusive government era (2009-2013), saying its costs have been inexplicably inflated from an initial US$370 million to US$533 million.

Sino hydro is a Chinese state-owned company and the world’s largest hydropower construction company with a 50% share of the international hydropower market.

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