Zimbabwe’s Rio Energy, a unit of RioZim, will build a 2,100 megawatt thermal power plant with China Gezhouba Group Corporation (CGGC) in northern Zimbabwe at a projected cost of US$3 billion, Rio Energy has announced.
The power plant at Sengwa will be constructed in four phases of about 700 megawatts each, bringing total capacity to 2,800MW.
“CGGC will develop the project and assist with the fund raising,” said Caleb Dengu, chairman of Rio Energy. “We have coal reserves to support a 10,000 megawatt plant at Sengwa.”
CGGC is the subsidiary of the China Energy Engineering Corporation, one of the world’s largest construction and engineering firms.
A 250 kilometre pipeline will carry water from Lake Kariba to Sengwa. The pipeline, and a 420KV power line, will be built by PowerChina, said Dengu. The first phase of the project will cost about US$1.2 billion, he added. The Industrial and Commercial Bank of China has given a formal expression of interest in the project and is negotiating with Sinosure, also known as the China Export and Credit Insurance Corp, to cover country risk insurance costs, Dengu said.
A two-year drought blighted the country’s Kariba hydro power plant by draining the reservoir, while aging equipment at its main Hwange thermal plant causes incessant breakdowns and outages.
RioZim has tried for years to find a partner to launch the Sengwa energy project, which has been on the table for decades. The area has proven coal reserves of 1.3 billion tonnes, but these have remained unexploited as Zimbabwe struggled to attract investment. However, in 2018, RioZim reported that it had begun receiving letters of interest from potential investors.
In its annual results for 2018, RioZim, which operates gold and diamond assets in Zimbabwe, said it has signed “binding exclusivity and framework agreements with a renowned international player and investor in respect of its Sengwa Coal Mine resource which will see the commencement and ground-breaking ceremony of the Sengwa Power Station Project in the near future”.
RioZim, which operates the Renco, Dalny and Cam & Motor gold mines, earlier in 2018 also announced a separate deal to build 180MW of solar capacity to power up its operations. RioZim applied earlier this year to the Zimbabwe Energy Regulatory Authority for licences to build and operate four solar power plants.
In 2018, RioZim said the contractor for the solar projects was Spanish-Japanese company Univergy International. RioEnergy, the RioZim energy arm, is backed Denham Capital, a resources and energy-focused global private equity firm.