THE Infrastructure Development Bank (IDBZ) says the $50 million bonds for the Harare Power Station repowering project and Kariba Power station refurbishment are now at the private placement stage where discussions with investors are now underway.
IDBZ chief executive officer Charles Chikaura said local pension funds were off takers for the bonds and so far money had been raised for the Harare Power Station and efforts were underway to reach the required levels.
Harare thermal station bond is worth $11,2 million while the Kariba Power station bond is for $38,8 million.
“The bank is currently engaged in discussions for private placement subscription of the bond issue and is confident that the total amount of $11,2 million for the Harare Power Station will be fully subscribed,” Chikaura said.
Private placement is the sale of securities to a relatively small number of selected investors as a way of raising capital. Investors involved in private placements are usually large banks, mutual funds, insurance companies and pension funds.
IDBZ is raising 15% for Zimbabwe Power Company for the Harare thermal station repowering project through the bond. The ZPC $11, 2 million includes insurance and its own contribution to the project, while the rest of the bond constituting about 85% will be financed by Jaguar Overseas Limited India.
Jaguar of India was awarded an Engineering Procurement Construction contract by the State Procurement Board and the total cost is $70,2 million.
The Harare thermal station repowering project will see the renovation of the plant so that it replaces the existing nine small chain grate boilers and employ modern technology.
After the completion of the project the Harare thermal plant will be able to take raw materials of lower grades of coal and garbage as opposed to the present plant that requires the use of high grade coal (washed cow peas).
The use of garbage waste will also help to resolve the issue of waste management for the local authority as garbage will now be sold to ZPC for use in the power station.
The Harare Power Station commenced operations in 1942 with a capacity of 21 megawatts and was decommissioned in 1970. It currently has two plants; Harare 2 and Harare 3 which have a coal handling and water supply system. The Harare 2 plant was commissioned in 1947 with an installed capacity of 75 megawatts but it was reduced to 30MW due to efficiency constraints. The Harare 3 plant was commissioned in 1955 with a capacity to produce 60MW of power.
During the first quarter of this year small thermal stations that include Harare, Bulawayo and Munyati missed their targets due to uneconomic and inefficient power production.
IDBZ has successfully raised $45 million since 2012 for Zimbabwe Electricity Transmission Distribution Company’s prepaid metering system.
In an update to journalists recently, ZPC managing director Noah Gwariro said ZPC was in the process of fulfilling the financial closure for the updating of the Harare power station.
“Term sheets have been received from Afrexim Bank and Exim Bank of India and the recruitment of project manager is in progress,” Gwariro said.