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HARARE -  Zimbabwe has closed a $1.4 billion funding project for a 600MW coal fired expansion project at Hwange, drawing on financing from China and other partnership with Standard Bank and Utho Capital among other participants.

The southern African country experiences power deficits that often cripple industry and manufacturing. But the situation has somewhat improved, thanks to power imports from South Africa and Mozambique as well as rising water levels at the Kariba Dam which feeds into a large hydro-power plant there.

“I'm thrilled to announce that today we closed on the US$1.4 billion 600MW Hwange coal fired expansion project. The transaction has been long time in the making since beginning of 2011,” said Victor Utedzi, an earlier leader of the project in a statement on Friday. 

The other corporate and government partners that worked on the deal and funding structure for the project include Chinese and Zimbabwe government officials, the Zimbabwe Power Company and Afreximbank. China’s Eximbank contributed about $1 billion of the funding for the project.

Sinohydro Corporation, another Chinese company, which will undertake construction of the project, KPMG, Bay Harbor and Norton Rose Fulbright are also among participants to the deal.

Zimbabwean President, Emerson Mnangagwa, who has been on a crusade to woo back foreign funding to Zimbabwe, said on Thursday that financial draw-down for the project has already commenced. This follows Mnangagwa’s visit to China for a state visit earlier this year.

“When we went to China, we were given a loan facility of around $1 billion for Hwange 7 and Hwange 8 whose draw-down will begin this week. In the process we have created jobs for over 1 000 people,” Mnangagwa said at a campaign rally in the Midlands.

The Hwange expansion project will be constructed over a period of upto three years and will supply an additional 30 percent to the country's generation capacity.

An official who has worked on the project said the arrangement was a “significant milestone in Public-Private partnership” undertakings for Zimbabwe, which is desperate for key funding to prop up its economy.

Power supply in Zimbabwe currently stands at 1200MW against peak demand of about 1600, leaving a supply gap of about 350MW. The country has also struggled to pay foreign currency for power imports as its economy continues to recline.

Engineers in the country say Zimbabwe’s power plants are now aged and suggest building new power generation projects through private public partnerships instead of expansion and expansion of current ones.

Other investors such as Old Mutual have also been building smaller power plants while companies such as Zimbabwean crocodile farmer, Padenga are now catering for their own power requirements.

- BUSINESS REPORT