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Norton Rose Fulbright advises on the expansion and rehabilitation of essential energy projects in Zimbabwe

Steven Gamble
Richard Metcalf

Global law firm Norton Rose Fulbright has advised Zimbabwe Power Company (ZPC) on the expansion and rehabilitation of the Kariba South hydro power and Hwange coal-fired power plants.

Zimbabwe Power Company (ZPC) has launched a number of projects over recent years to expand and upgrade electricity generation in the region, including:

  • rehabilitation of the existing 920MW Hwange coal power station;
  • the 600MW extension of the existing  Hwange coal power station;
  • rehabilitation of the existing 750MW Kariba South hydropower station; and
  • the 300MW expansion of the existing Kariba South hydropower station.

Norton Rose Fulbright, alongside its alliance partner Gill, Godlonton & Gerrans of Zimbabwe, has provided legal advice to ZPC on each of these projects.

In Zimbabwe, the gap between installed capacity and peak demand is approximately 1,200MW. As a result, Zimbabwe is reliant on importing power via regional interconnectors. The Zimbabwe state utility, ZESA Holdings, imports up to 40% of its power requirements from Eskom (South Africa), Cahora-Bassa (Mozambique) and Snel (the Democratic Republic of Congo) through the mechanism of the Southern Africa Power Pool (SAPP). Where this demand gap is not bridged, there is load shedding, including during peak periods.

In 2017, as part of its rehabilitation and expansion initiatives, ZPC negotiated a US$120 million facility with the Standard Bank of South Africa (as lead arranger and co-lender) and The Eastern and Southern African Trade and Development Bank (PTA Bank) (as co-lender) to provide finance to ZPC for the expansion of the Kariba South hydro power station. This facility supports the original 20-year $319 million loan negotiated in October 2013 by ZPC with China Exim Bank to finance the expansion of Kariba South and completes the funding required to increase the installed capacity of Kariba South by the addition of a further 300MW which will result in an aggregate 1,050MW installed capacity. The new hydropower plant is to be wholly owned and operated by ZPC’s subsidiary, Kariba Hydro Power Company (private) Limited (KHPC) and completion is scheduled for 2018.

The funds made available under the US$120 million facility will also be used to assist with the rehabilitation of the existing coal fired power plant at Hwange. Hwange has an installed capacity rated at 920MW, but is currently operating at only 600MW due to ageing equipment. The rehabilitation of the plant will significantly increase to Zimbabwe’s power resources.

The US$120 million facility is backed by a 15-year power purchase agreement between ZPC and offtaker Namibia Power Corporation (NamPower) for 80MW of the capacity at Kariba South.

In addition to these projects, ZPC is finalising the equity and debt arrangements required for the $1 billion extension of Hwange which will add 600MW of thermal power to the national grid. The new 600MW thermal power plant is to be majority owned and operated by ZPC’s subsidiary, Hwange Electricity Supply Company (private) Limited (HESCO) as a PPP joint venture with Sinohydro of China. Subscription and shareholder agreements between ZPC, HESCO and Sinohydro of China are in the process of being finalised. 

The team was led by director Steven Gamble (Johannesburg, Norton Rose Fulbright), partner Richard Metcalf (London, Norton Rose Fulbright) and alliance partner Sue Brighton (Zimbabwe, Gill, Godlonton and Gerrans).

Steven Gamble commented:

“The Hwange extension project is understood to be the first project where the Chinese State owned company Sinohydro has agreed to take a minority stake in a major power project. It is an exciting development in terms of PPP within Zimbabwe and Africa as a whole”.

Richard Metcalf commented:

“In parallel with these domestic initiatives Zimbabwe is also engaged with Southern Africa Power Pool (SAPP) in developing new cross-border transmission capacity. Taken together these projects will lead to significant improvements in the supply of electricity within Zimbabwe”.

Sue Brighton of Gill Godlonton and Gerrans added:

“The projects being undertaken by ZESA and its subsidiaries are of vital importance to the rejuvenation of the economy and are seen by local business and investors as a most encouraging development.”

For further information please contact: 

Rachel Lailey, content manager, Africa
Tel +27 11 685 8624 | Mob +27 79 892 9369
Rachel.lailey@nortonrosefulbright.com

Meeta Vadher, Senior PR Manager
Tel: +44 (0)20 7444 3097; Mob: +44 (0)7595 886 276
meeta.vadher@nortonrosefulbright.com

Notes for editors:

Norton Rose Fulbright is a global law firm. We provide the world’s preeminent corporations and financial institutions with a full business law service. We have more than 3500 lawyers and other legal staff based in more than 50 cities across Europe, the United States, Canada, Latin America, Asia, Australia, Africa, the Middle East and Central Asia.

Norton Rose Fulbright will combine with Chadbourne & Parke, a leading international law firm, during the second quarter of 2017. Norton Rose Fulbright's expanded practice will have more than 1000 lawyers in the US and 4000 lawyers worldwide.

Recognized for our industry focus, we are strong across all the key industry sectors: financial institutions; energy; infrastructure, mining and commodities; transport; technology and innovation; and life sciences and healthcare.

Wherever we are, we operate in accordance with our global business principles of quality, unity and integrity. We aim to provide the highest possible standard of legal service in each of our offices and to maintain that level of quality at every point of contact.

Norton Rose Fulbright Verein, a Swiss verein, helps coordinate the activities of Norton Rose Fulbright members but does not itself provide legal services to clients. Norton Rose Fulbright has offices in more than 50 cities worldwide, including London, Houston, Toronto, Sydney and Johannesburg.

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