Matshela Energy, owned by former Eskom CEO Matshela Koko, says it has reached a power purchase agreement with power utility ZETDC, paving the way for a project that he previously complained was caught up in red tape.
The two companies have agreed terms under which Matshela will sell power to ZESA, when it completes its 100MW solar farm in Gwanda.
“We have come a long way since we started with this project in 2018. We shall not falter. The people of Gwanda have been good to us, and we owe it to them to succeed,” Koko says.
Matshela Energy was licensed in 2019. After delays, Koko claimed that corrupt officials were standing in his way and trying to shake him down for bribes. Fortune Chasi, then Energy Minister, challenged Koko to publicly produce the evidence, but got no response.
“It’s easy to say Zimbabwe is open for business. Practically, it is extremely challenging,” Koko tweeted in 2020.
However, Matshela Energy was soon granted a license amendment to add a 40MWh storage facility at the site, which would allow it to provide stable power when there is grid disruption. The power purchase agreement now awaits a government guarantee, Matshela said in this statement.
Zimbabwe is desperate to attract private investment into renewables to fill the power deficit, opening bids for 500MW of solar in 2020. However, the country’s currency risk has kept many investors away, because producers fear that they would not be paid profitable tariffs for the power they would sell to ZESA.
Under IPP arrangements such as Matshela Energy’s, companies source their own capital, build plants, and then sell the power to customers.
While Zimbabwe has issued permits for a combined capacity of 6,858MW, independent producers are supplying only about 135MW to the grid.
Last October, an international arbiter – the Johannesburg branch of the International Chamber of Commerce – ruled that Zimbabwe was entitled to pay IPPs in local currency.