Monday, October 3, 2011

Zambezi: Batoka dam costs balloon

Batoka costs balloon

Thursday, 29 September 2011 11:07

Shame Makoshori,Senior Business Reporter

A board member with Zimbabwe's state-run power company says the cost
of constructing the 1 650 megawatt (MW) Batoka hydropower station has
doubled from US$2,5 billion when the project was conceived in 1993.

The power project is a joint venture between Zimbabwe and Zambia.
The Batoka power station turbines were expected to start turning in
2001, generating an additional 800 MW for Zimbabwe.
However, lack of funding and reluctance by the Zambian government to
the start the project has delayed its implementation.
ZESA Holdings deputy chairperson, Simba Mangwengwende, who worked for
years as the utility's chief executive officer, told delegates at a
recent mining indaba that fresh studies were imperative to establish
the true cost of completing the project should its promoters decide to
start implementing it.
"The cost of constructing Batoka could have doubled by now," said
"We are still using 1993 estimates. We need to (revise the)
estimates," he said.
Investors at the conference had queried why Zimbabwe had continued to
mourn over power shortages when huge potential was lying unexploited
through several projects, including Batoka.
Construction of the power station was expected to resolve the
country's power shortages which have disrupted the normal functioning
of the country's frail-but-recovering economy.
If the project had been brought to life, joint owners, Zimbabwe and
Zambia, were expected to export surplus power to countries within the
southern African region.
But Zambia, which has shifted goal posts several times, appears to be
committed with power projects in its territory, such as the Kafue
Gorge, which is estimated to cost US$2 billion.
This would mean cash-strapped Zimbabwe, battling blackouts due to
electricity generation constraints largely attributed to lack of
investment in new plants as well as antiquated machinery at existing
plants, would be forced to rope in partners to bankroll the project.
This, however, would require the approval of Zambians with whom it
shares the Zambezi River.
Another option would be granting independent power producers the right
to build and operate the power station on a commercial basis.
"There were misunderstandings between Zimbabwe and Zambia over the
assets at Kariba but this has been resolved. Now that this has been
resolved it is possible for the countries to work together,"
Mangwengwende said.
A senior ZESA official was recently quoted in the local press saying
Zimbabwe needed cooperation from Zambia to implement the project.
"The question of whether we go it alone or not entirely depends on the
Zambians' willingness to join into the venture and I must say that
right now the political differences between the two countries
regarding the project (Kariba) have been resolved. But Zambia can say
that they are unable to raise the requisite financial resources
because they are already engaged in other power projects," said the
The Batoka dam site is on the Zambezi River, about three kilometres
downstream the Mwemba Falls, and 54 km downstream the Victoria Falls.
Misunderstandings over the ownership of the Kariba hydroelectric power
plant, which the two countries share, prompted the Zambian government
to develop cold feet over Batoka in 1994.
"Such a background does not give us a firm foundation to enter into
yet another costly project like the Batoka one," former Zambian energy
minister, Edith Nawakwi, told The Financial Gazette in 1994.
Demand for power had been rising in Zimbabwe since 2009 when new
policies introduced by the inclusive government enabled companies to
resume production.
A recent report by the Ministry of Economic Planning and Investment
Promotion said the mining industry alone had received new investment
proposals worth US$1,7 billion since 2009.

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