ZIMBABWE and Zambia remain hopeful that the US$4 billion Batoka gorge hydroelectric project will come to fruition, over a century since the project was first conceived.
The southern African neighbours are still waiting for investors to rescue the project, which has been in limbo since 1993 when initial feasibility studies were done.
The project has been stalled due to an impasse between the two countries over a US$71 million debt accrued by Zimbabwe emanating from shared costs in the construction of Kariba Dam and associated infrastructure under the Central African Power Corporation, which was disbanded to give way to the Zambezi River Authority (ZRA).
Zimbabwe and Zambia last week held a joint investors conference in Livingstone in a bid to raise US$4 billion.
The conference, however, did not result in solid commitments, save for general interest in power projects by the African Development Bank (AfDB) that has earmarked US$2 billion for energy in Africa by 2020.
AfDB might channel some of the funds to Batoka.
Standard Chartered Bank also could not make a commitment, saying it would evaluate the project before taking a position.
The bank has already invested in power projects in Zambia and across Africa.
Batoka, one of southern Africa’s biggest power projects expected to generate 2 400 megawatts (MW), had repeatedly hit a snag as suitors have apparently shunned the project.
According to the World Bank, the delay in implementing the project has already cost Zambia and Zimbabwe US$45 billion in missed economic opportunities.
This includes an estimated US$7 billion in foregone electricity sales.
Although ZRA is upbeat that the project could finally take shape after the investors conference, odds seem to be staked against this mammoth venture.
Analysts said Zimbabwe remained high risk destination, making it unattractive for investors due to its economic policies.
Zimbabwe has at least US$10 billion in foreign debts, about half of which is in arrears.
“We do not have a good history of paying our debts. Zambia has very progressive policies and we are riding on them to get assistance,” said former minister of energy and power development, Dzikamai Mavhaire.
He said during his tenure as the energy minister, government had convinced the Chinese to fund the Kariba South power generation project.
Economist, Headache Makura, cast doubt over the Batoka project, saying investors would not be keen on injecting money into the project especially when the country was headed towards elections in 2018.
“I will be very surprised if anything comes up before the 2018 elections, but since it’s a national project, I wish us good luck,” said Makura.
Six potential investors reportedly pulled out of the Batoka project in 2013 under unclear circumstances.
Makura said Zimbabwe was a high risk investment destination. He pointed out that this was the reason Nigerian billionaire, Aliko Dangote was dragging his feet on planned investments in the country.
Dangote promised to invest in a US$400 million power project that would generate 250MW.
President Robert Mugabe and Chinese leader, Xi Jinping signed mega deals amounting to US$4 billion in the energy and power development sector, but a few of these have taken off the ground three years on.
The Chinese have reportedly invested US$2 billion in neighbouring Mozambique, while injecting about US$9 billion in Tanzania’s rail sector.
“Because Zimbabwe has great potential, any serious investor would want to keep up appearances. So all people will do is express interest so there is not much money coming into the project,” Makura said.
He said there was need for a feasibility study to ascertain the viability of the Batoka project since it has been stalled for more than 25 years.
“Zimbabwe is a risk destination and even the Chinese, our all weather friends, are not keen on investing much into this economy,” argued Makura.
Economist, Elliot Muganhu, weighed in saying the success of the Batoka project hinged on the ability by project promoters to secure funding.
The Batoka gorge hydroelectric scheme’s funding model comprises of debt and grants to be raised from the private sector and development financial institutions.
As early as 1994, Zambia was concerned by the cost, which was US$2 billion.
“Such a background does not give us a firm foundation to enter into yet another costly project like the Batoka one,” then Zambia’s energy minister, Edith Nawakwi, told the Financial Gazette in 1994.
Power plants at Batoka would be further developed under a project finance structure and owned by a special purpose vehicle, with funding coming from the private sector and the respective utility companies in Zambia and Zimbabwe.
The Batoka project would be run on a build, own, operate and transfer model.
Mavhaire said the country’s policies were undermining the Batoka project.
“It is sad that we continue to believe in ownership rather than business so if we can adjust our policies the project would be a success,” Mavhaire said.
Batoka’s success would be a welcome development for Zimbabwe whose industries continue to reel from poor power supplies.
The United Nations estimates that the world’s population will consume 50 percent more energy by 2035 and it is apparent that more energy sources are needed.
With climate change taking its toll on southern Africa, resulting in successive droughts during the past decade, the Batoka project could prove risky.
In 1992, there were already fears that rainfall was dropping, casting doubt over the Batoka project.
Hydro electric power projects the world over have been suffering major setbacks due to climate change, with rainfall patterns having drastically changed.
Many countries are migrating to solar or nuclear energy.
“We must take cognisance of the fact that we may not get much rains every year so we should consider gas and solar,” said Mavhaire, adding that Zimbabwe was endowed with resources that could transform the country into a net exporter of electricity.
Muganhu said more value could be obtained from other sources of renewable energy like solar.
“I thought one would explore solar energy. Looking at other renewable sources of energy would give us more value,” said Muganhu.
Hydroelectricity is viewed as a lesser evil than other forms of energy, but the feasibility of such projects has been waning in recent years.
The Batoka project will consist of two surface power plants with a combined capacity of 2 400MW, one on either side of the river bank, each having a capacity of 1 200MW.
Each plant will also have six 200MW turbines, while transmission lines with a capacity of 330kV have been earmarked for Zambia and 400kV for Zimbabwe.
Upon its completion, Batoka would help ease power challenges that have bedevilled the country, whose national demand at peak is 1 600MW against available generation of about 1 000MW on average.
This is supplemented by electricity imports from South Africa’s Eskom and Hydro Cahora Bassa of Mozambique.
Zimbabwe is in dire need of power as the nation drives towards industrialisation where more industries are likely to open, thereby raising the energy requirements.
The ZRA has engaged consultants to update the feasibility studies through a grant of US$6 million under the Multi Donor Trust Fund for Cooperation in International Waters in Africa, administered by the World Bank.
In 1992, environmentalists attacked the project arguing that it would affect livelihoods surrounding the Zambezi, fearing floods and diseases for the communities on the river banks.
But Finance and Economic Development Minister, Patrick Chinamasa, said an Environmental Impact Assessment done by Environmental Resources Management revealed that the project would raise the share of renewable energy in electricity from 42 percent to 80 percent.
“This will ensure that we comply with environmental requirements guiding the level of carbon emissions,” said Chinamasa, adding that the Batoka project would transform lives in the two nations.
It remains to be seen if the two countries would be able to raise enough investment to kick start the Batoka project. The clock continues ticking.