NamPower to Lend Zimbabwe Power Utility Cash to Guarantee Supply

Namibia Power Corp. said it will loan funds to Zimbabwe’s power utility to refurbish and raise generation capacity of two thermal power plants in return for guaranteed supplies of electricity.

NamPower, as the Windhoek-based state-owned company is known, has agreed in principle to upgrade the facilities to secure guaranteed electricity until 2018, when Kudu, a $1.2 billion, 800-megawatt gas-to-power plant it’s developing, should start operating, Managing Director Paulinus Shilamba said by phone on Nov. 4. He declined to say how much it would lend.

The southwest African nation, the world’s biggest miner of offshore diamonds and fifth-largest uranium producer, imports about 53 percent of its electricity requirements from neighboring countries, NamPower said in its 2012 annual report.

“We have identified an investment opportunity at the two power stations, which we also want to form part of our short-term critical supply project,” he said. “We have a strong balance sheet and are able to finance a deal of this nature.”

Zimbabwe Power Co., the Harare-based electricity-generation unit of the country’s ZESA Holdings Pvt Ltd. utility, plans to raise generation capacity at the plant in Harare, the capital, to 120 megawatts from 50 megawatts, and at the facility in Bulawayo to 90 megawatts from 30 megawatts, Newsday reported on Oct. 28. One megawatt of capacity is enough to supply 2,000 average European homes.

ZPC needs $180 million to boost generation capacity at the two power plants, ZPC said.

New Agreement

Preliminary investigations conducted by NamPower showed the “power stations are not in bad shape and with minimal investment can be brought into operation,” Shilamba said. NamPower wants the deal structured along a 2007 agreement in which it loaned ZESA $40 million to refurbish four units at the coal-fired Hwange plant, securing supplies of 150 megawatts over five years, he said.

“Our deal with ZESA over Hwange power station is ending in 2014 and our expectation is that it should be the benchmark if we finalize an agreement to loan them money to refurbish the two stations,” Shilamba said.

He wouldn’t disclose how much power the Namibian utility plans to secure from Zimbabwe.

“It has to be a win-win deal for both of us,” Shilamba said. “If we invest money it means we expect to benefit.”

To contact the reporter on this story: Felix Njini in Windhoek via Cape Town at dgriffiths1@bloomberg.net

To contact the editor responsible for this story: Antony Sguazzin at asguazzin@bloomberg.net

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