NANCY MWAPE, Livingstone
ZAMBIA and Zimbabwe are set to revive the implementation of the Batoka hydro-power scheme following the co-hosting of an investors conference that attracted over 300 potential funders in Livingstone last month.
The Batoka project is being spearheaded by the Zambezi River Authority (ZRA), a bi-national organisation jointly and equitably owned by the two governments.
The two countries are endowed with natural resources to foster economic growth but this has not been fully harnessed because of inadequate electricity supply.
Over the years, socio-economic development has failed to take place at a rate that meets stakeholder expectations.
A large part of the population cannot access electricity, putting pressure on the environment as people search for alternative sources of energy such as charcoal.
This has resulted in widespread deforestation, a scourge the Southern African Development Community (SADC) is battling with because of its cause effect on land degradation, global warming and climate change.
It is against this background that Zambia and Zimbabwe have embarked on the development of the 2,400 megawatts (MW) Batoka power project.
The project will allow for the construction of the 181 metre high arch gravity roller compacted concrete dam, as well as two surface power stations located on both banks of the Zambezi River with an installed capacity of 1,200MW each.
The remarkable journey for the Batoka project was identified way back before the Kariba Dam was built. The project was first mooted in 1904 to 1972 when serious investigations were undertaken to embark on it.
However, because of economic considerations at that time, the Kariba Hydro Electric Scheme was built first.
In the late 1980s, demand for power in the two countries rose significantly, spurred by the boom in the mining sector.
However, insufficient investment in generation capacity has led to power deficits which have resulted in load-shedding, loss of production and lower incomes.
Minister of Mines Christopher Yaluma says the commissioning of the Batoka project will open up the country to a lot of new green investments in the mining sector that have been on hold due to insufficient power supply.
Zambia and Zimbabwe have agreed to revisit the Batoka project as a source of additional power supply, which culminated in the engagement of consultants to carry out the first feasibility studies in 1992.
Although the studies indicated that the project was viable, the economic situation at the time could not allow construction to start.
Both states intend to build the Batoka on financing arrangements similar to the Kariba Dam project, such as loans, grants, and both governments funding it.
The investor conference held in Livingstone was aimed at marketing the project to potential financiers and investors following the preliminary feasibility study by Ernst and Young (EY).
According to the EY report, dam construction is expected to start next year and be completed in 2024, while the construction of the two power plants is expected to start in 2021 and end in 2024.
Opening the conference, Vice-President Inonge Wina re-affirmed the two countries’ commitment to develop the US$ 4 billion Batoka power project expected to create jobs and power industrial development in the SADC region.
Mrs Wina assured investors of the liberalised market in the energy sector to encourage private sector participation.
“We have accommodative fiscal environments for the developments and transmission system policies that assure markets across the African region. We are committed to ensure that the price of power is cost-reflective to accommodate full recovery of the investments,” she said.
Mrs Wina said Zambia and Zimbabwe will always endeavour to work together on projects of mutual benefit because of the long cordial relationship that has existed for many years regarding management of water bodies.
The two governments have appointed the AfDB as lead financial advisers for the project.
AfDB vice-president Amadou Hott reaffirmed the bank’s support to the project and to act as lead arranger in the transaction.
As the lead arranger, AfDB will help structure the entire transition, put its own money in the project and invite other financial institutions to jointly raise the required US$4 billion.
Mr Hott said out of US$4 billion, about US$3billion will be debt from lenders such as AfDB.
“There is need to coordinate the transaction so that it goes smoothly, and also advise the two governments on the most optimal structure that will allow for private sector participation,” he said.
Zimbabwe’s Finance Minister Patrick Chinamasa said a project of this magnitude requires preparation for the market to provide clarity for easier investor assessment of risks.
Zambia’s Minister of Energy and Water Development David Mabumba assured investors that the environmental and social impact assessment will be taken into account and mitigation measures put in place.
“We shall also ensure that an environmental and social management plan is prepared and that there will be a public disclosure of the outcomes to ascertain that their concerns are taken into consideration,” he said.
However, due to sparse human habitation around the gorge area, the project will not have any adverse impact on the social and economic welfare of the people on either side of the Zambezi River.
And Zimbabwe’s Energy Minister Samuel Undenge assured investors that SADC energy ministers have resolved that all energy tariffs should be cost-reflective by 2020 and they are moving towards that. The decision follows adoption of a resolution tabled in 2014.
And Zambia’s Minister of Finance Felix Mutati said as a way forward, a road map of various activities related to development and construction of the Batoka dam wall and the power stations on both sides, will be developed in consultation with all stakeholders.
Mr Mutati said there is need for concerted collaboration among all responsible ministries to ensure success of resource mobilisation and timely construction of the dam and the power stations.
“The Batoka power project is a flagship undertaking that will create 6,000 permanent jobs per annum during construction and 1,200 during the operational phase,” he said.
Mr Mutati said the Zambian and Zimbabwean governments are committed to a transparent bidding process which will ensure a competitive process.
The two-day conference generated significant interest from both financiers and investors who expressed commitment to participate once the project procurement documents are finalised.
Implementation of the Batoka project will improve power availability in both countries, reduce load-shedding, increase industrial development and facilitate the opening of, new and expansion of, existing mines as Zambia pursues its goal of increasing copper production.