Nine bidders for Batoka project

Nine bidders for Batoka project
Published: 25 April 2014
THE Zambezi River Authority (ZRA), an entity owned by the governments of Zimbabwe and Zambia has narrowed down to nine the list of bidders vying to develop the proposed Batoka project, it has been established.

Twenty five companies had initially expressed interest to develop the multi-billion dollar Batoka power project on a Build, Operate and Transfer (BOT) basis. The Batoka project, which requires more than US$2,5 billion, involves the construction of a 181 metre high Roller Compacted Concrete Gravity arch dam and two underground hydro-electric power plants on each side of the Zambezi River, some 54 km downstream of the Victoria Falls.

Energy and Power Development Minister, Dzikamai Mavhaire, told The Financial Gazette that nine companies had been shortlisted but could not reveal their identities. He said these would now be subjected to further evaluation in order to reduce the number to six. He indicated the evaluation process would be completed soon.

"Although I cannot tell you the names, I can confirm that the bidding companies have been reduced to nine  from the 25 who expressed interest to develop the Batoka project  and (these) will further be reduced to six by this coming April," said Mavhaire.

The proposed power plant, which falls under the supervision of ZRA, is expected to generate 1 600 megawatts (MW) of electricity to be shared equally between the two countries. This would be the second power project to electrify the two countries after Kariba's hydro-electric power plant. Mavhaire also disclosed that the two southern African countries were working on a strategy to move away from the BOT concept to loan option.

To execute this, Mavhaire told C&M that the two southern African countries were looking for cheap loans to construct a dam and set up the run-of-the river hydro-electric power station for Zimbabwe and Zambia, a development which will alleviate power shortages in both countries.

Zimbabwe is currently facing crippling power shortages due to aging generation plants and the growing demand for power. This has hurt industry and household consumers. National power demand at peak periods is estimated to be at 2 200 MW against available generation of about 1200 MW on average. This is supplemented by imports from Hydro Cahorra Bassa of Mozambique, the countries' only remaining regional supplier.

"We have said that we should not close ourselves to the BOT concept," Mavhaire said.

"Both countries are on the same page on the issue and we agreed that why don't we open up and invite everybody so that we will be in a position to choose the best option instead of tying ourselves to BOT."

"The whole operation of it is we want to get the cheapest money available. Mind you this is loan money that we are looking for and we have to pay back."

BOT is an arrangement in which a private entity finances and builds an infrastructure project, operates the facility for a certain period of time to enable it to recover its investment, operating and maintenance expenses in the project. During this period, the private entity has the responsibility to raise the finance and is entitled to retain all revenues generated by the project.

The facility would eventually be transferred to the contracting State,  in this case the Zimbabwean and Zambian governments,  at the end of the concession agreement. Preparations for the project are already at an advanced stage with the completion of the access road linking the Zambezi River gorges and the Bulawayo-Victoria Falls highway. The Batoka North access road on the Zambian side has also been completed.

The project has been on the cards for two decades but could not take off due to financial constraints. Plans for the project were initially mooted in 1993 with the feasibility study of the project undertaken by Batoka Joint Venture consultants. The consultants established Batoka as the most economically viable option for immediate development, primarily because it has the lowest specific generation cost and minimal negative environmental impact.

However, the Zambian government was reluctant because of an outstanding debt which it wanted Zimbabwe to clear first. The debt was for Central African Power Company assets that had been shared between Zimbabwe and Zambia after its dissolution. The agreement to construct Batoka was dependent on Zimbabwe's commitment to pay off the debt it owed Zambia. Last year, the Zimbabwe government agreed to pay off the US$70 million debt, paving way for the commencement of the Batoka project, 20 years after initial plans to roll out the project were mooted.
- fingaz
Tags: Batoka,

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