THE Mutapa Investment Fund (MIF) has approved a US$350 million joint venture between Indian firm Jindal Africa Investments and Zesa to refurbish six units at Hwange Thermal Power Station, the Zimbabwe Independent can reveal.
This significant investment is expected to add approximately 400 megawatts (MW) of electricity to Zimbabwe’s national grid, offering some relief as the country continues to grapple with severe power shortages.
Currently, Zimbabwe faces daily load-shedding of up to 16 hours, with businesses incurring heavy costs by relying on generators.
Large corporations have reported spending up to US$300 000 per month on fuel, further driving up production costs.
The cost of using alternative energy sources is about 50% higher than conventional electricity.
MIF’s chief executive officer (CEO), John Mangudya, told the Zimbabwe Independent in an exclusive interview this week that the deal will be done through a rehabilitate, operate, and transfer (ROT) framework.
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“Regarding developments at Hwange Thermal Power Station, the Mutapa Investment Fund board has approved the partnership between Zesa and Jindal Africa Investments for the refurbishment of Hwange units 1 to 6 on a rehabilitate, operate and transfer basis," he said.
“This investment, which constitutes a public-private partnership arrangement, will enhance the supply of electricity into the grid by around 400MW to 840MW from the rehabilitation of these six units. This initiative will add electricity into the grid by around 400MW. The estimated cost of this project is around US$350 million."
According to Mangudya, the restoration project will be funded by the investor.
President Emmerson Mnangagwa, in August 2023, commissioned Hwange power station’s Units 7 and 8, which added 600MW to the national grid.
The project was done by a Chinese firm, Sinohydro, at a cost of US$1,5 billion.
As of yesterday, the country was generating 1 267MW of electricity, with Hwange contributing more than half of the total output.
Jindal Africa is a subsidiary of Indian multinational conglomerate Jindal Steel and Power (JSP), which is part of the diversified OP Jindal Group.
With a global worth of approximately US$12 billion, the OP Jindal Group is a prominent player in various sectors, including steel, power, mining, coal-to-liquid, oil and gas, and infrastructure.
Employing over 50 000 people worldwide, Jindal Africa has operations in South Africa, Mozambique, Botswana, and Namibia.
Following its transformation from the Sovereign Wealth Fund last year, MIF has been building the framework for increased investments.
Currently overseeing 30 parastatals, many of which are near insolvency, MIF has a mandate to reverse the decline in the contribution of state-owned enterprises (SOEs) to Zimbabwe’s gross domestic product (GDP).
The SOEs' share of GDP has plummeted from 40% in the 1990s to just 12% in 2021. Mangudya has previously stated that his goal was to buck the trend and bring these companies back to their previous level of performance.
A large number of them are burdened by legacy debts. In relation to improving
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power generation at Kariba, Mangudya said the plant was reliant on water levels. The drought affected water levels in Lake Kariba, hence low power generation. He said MIF was crafting ways to improve power supply such as implementing the independent power producers’ (IPPs) projects.
“Additional measures to enhance power supply include upscaling or ramping-up the implementation of investments by the independent power producers,” he said.
"A significant number of IPPs were approved by Zera (Zimbabwe Energy Regulatory Authority), and what is outstanding is implementation, which in turn is dependent on appropriate financial structures to assure investors of the country’s repayment capacity of their funds.”
Mangudya also noted that they have considered tapping into gas as part of the energy mix. He added that the MIF board has already approved its participation in underwriting Zimbabwe depository receipts issued by Invictus Energy.
“Gas provides a good source of energy. This is the reason why the MIF board approved the participation of MIF in underwriting of the US$5 million Zimbabwe depository receipts issued by Invictus Energy on the Victoria Falls Stock Exchange.”
MIF, working through Zesa, is putting in place a number of initiatives to address the power outages bedevilling the country.
These measures include accelerating the installation of smart metering and prepaid meters to all users of electricity across the country.
This is meant to align the supply of electricity with effective demand and also improving debt collection. Zesa is also upscaling the installation of net-metering to enhance electricity supply into the grid from the excess power from private individuals and entities with their energy sources such as solar. Mangudya, who was recently in India, disclosed that MIF was pursuing a number of potential partnerships with Indian firms to enhance the productive capacity of Zimbabwe's economy. He also stated that the fund had zero tolerance to corruption, and is focused on delivering good corporate governance. MIF is focused on enhancing financial performance from its investee companies, according to Mangudya.
Some of the firms under MIF include the National Railways of Zimbabwe, Air Zimbabwe, Zimbabwe United Passenger Company, Cottco, Kuvimba Mining House, Silo Investments, National Oil Company of Zimbabwe, PetroTrade, POSB, TelOne, Arda Seeds, Zimbabwe Power Company, among others.