Southern African News Features                                           SANF 12 No 28 , July 2012

SADC lures investors for ZiZaBoNa energy project

by Kizito Sikuka

At least five investors have expressed interest in developing an electricity transmission interconnector linking Zimbabwe, Zambia, Botswana and Namibia. Commonly known as ZiZaBoNa, the transmission interconnector project has the capacity to increase power trading among participating utilities, as well as provide an alternative route and help decongest the existing central transmission corridor that currently passes through Zimbabwe.

The five investors – the African Development Bank (AfDB), Development Bank of Southern Africa (DBSA), European Investment Bank (EIB), French Development Agency and Stanbic Botswana – pledged more than US$160 million towards the project. Total funding requirement is US$223 million, comprising US$67 million equity and US$156 million debt financing. DBSA has indicated that it is willing to contribute US$50 million over a 17-year horizon.

The French Development Agency pledged to commit between US$30 million and US$50 million, while the AfDB said it is prepared to pick up 40 percent of the debt financing required. The rest of the financing could be covered via “African Finance Partners”. Stanbic Botswana also said it is ready to invest in the project, noting the amount is something it could provide, given that it recently funded an even larger energy project in Botswana. The bank provided funding for the US$800 million for the Morupule B energy project in Botswana.

The potential investors disclosed their strong interest in the ZiZaBoNa project at a recent investor’s roundtable held in Swakopmund, Namibia, to lure investment for the project. Consultations with the financiers are expected to be conducted in October or December, with intended financial proposals by March 2013. Speaking at the meeting, Namibian Prime Minister, Nahas Angula said the ZiZaBoNa project deserved all the support as it is “an example of regional cooperation and integration, and how strong regional cooperation can be”.

SADC Deputy Executive Secretary responsible for regional integration, João Caholo concurred, saying that regional ministers for infrastructure have already identified the ZiZaBoNa project as one of the major priorities for the SADC infrastructure development master plan. The master plan, which will guide development in key infrastructure in southern Africa, is expected to be approved by the SADC Heads of State and Government during their annual summit set for Maputo, Mozambique on 17-18 August.

Under the ZiZaBoNa agreement signed in 2008, all four countries’ respective power utilities – the Zimbabwe Electricity Supply Authority (ZESA), Zambia Electricity Supply Company (ZESCO), Botswana Power Corporation (BPC) and Namibia Power Company (NamPower) – are expected to finance parts of the project that fall within their national boundaries. The initial capacity of the transmission interconnector will be 300 megawatts (MW), which will be later increased to 600MW.

The project is to be implemented in two phases. The first phase will cover the construction of a 120-kilometre 330 kilovolt line from Hwange Power Station to Victoria Falls where a switching station will be built on the Zimbabwe side. The line will extend to a substation at Livingstone in Zambia. The second phase will involve the construction of a 300-km 330kV line from Livingstone to Katima Mulilo in Namibia, through Pandamatenga in Botswana.

The Zimbabwe-Zambia interconnector will be built as a high voltage line with a transmission capacity of 430kV. However, it will operate as a 330kV line during the first phase. The ZiZaBoNa project will be organised as a Special Purpose Vehicle, to be incorporated as a company in Namibia. The four utilities will take 20 percent each of the equity. According to the Southern African Power Pool (SAPP), which coordinates the planning, generation, transmission and marketing of electricity on behalf of utilities in the region, the project should be ready for implementation between 2014 and 2015.

The project definition phase should end by August, followed by the project preparation phase that will run until June 2013. Financing and contracting will take place in 2013. When fully operational, the ZiZaBoNa transmission interconnector will, among other things, make it possible for NamPower of Namibia to import power directly from Hwange in Zimbabwe. Currently electricity from the Hwange Power Station is being routed to Namibia through South Africa.

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