Surge in energy sector investments
ZIMBABWE is attracting a significant increase in energy sector investments, capitalising on the growing electricity demand with many licensed Independent Power Producers nearing the financial closure stage.
The financial close stage is regarded as a pivotal moment in project finance as it is a phase where all the financial agreements and commitments are formalised and the project is officially set in motion.
This is where the project’s financing is secured, ensuring the necessary funds are available to proceed with the project’s construction and operations.
There had been concern that several licensed Independent Power Producers are struggling to implement projects due to lack of adequate funding, raising concern that some are holding licences for speculative purposes.
In an interview on the sidelines of a two-day capacity building workshop for the southern region in Bulawayo, which ended on Tuesday, Zida chief business development officer, Mr Noel Mahombera, said there are high investment inquiries in the infrastructure, energy, mining and agricultural sectors.
“Energy is another sector that has a lot of opportunities with small Independent Power Producers coming on board seeking to harness green energy through solar farms,” he said.
“Also, we have a lot of inquiries in the mining sector, a reflection that we are a resource-based country.”
In the energy sector, he noted that challenges have mostly been on the financing of the projects, hence delays in implementation.
“When projects are being conceptualised and reach commercial closers where parties sign agreements, they have to go through financial closure and then go and seek investors for a particular project,” said the official.
He said in the past the major hurdle was reaching financial closure because before reaching that, the return must be demonstrable.
“The challenge with the energy sector has been that traditionally, there had been one off-taker, the Zimbabwe Electricity Transmission and Distribution Company (ZETDC),” said Mr Mahombera.
“Now that the Government has allowed for IPPs to be able to go to back-to-back agreements and to guarantee currency convertibility for specific projects, 13 projects that have been accumulating over several years have already been able to reach financial closure.
“Going forward, we believe that the financing challenges have largely been addressed. “There has been a lot of effort put into the various projects and considering the process taken from conceptualising, approval by relevant authorities and talks with financiers, there is commitment to the projects,” he added.
“In my view, very soon we will see a flurry of energy projects in the energy sector coming to fruition.” Zimbabwe is scaling up efforts to harness clean energy sources in line with the National Development Strategy 1 (NDS1), which emphasises reliable and affordable energy development.
Government has already crafted the National Renewable Energy Policy to achieve and install a renewable capacity of 1 100MW or 16,5 percent of total electricity by 2025.
By 2030, the target is that the installed renewable energy capacity should be 2 100MW or 26,5 percent of the overall electricity supply.
More local companies have started using renewable energy such as solar while broader initiatives such as investing in smaller hydro-power plants, wind and establishment of bio-digesters in rural areas are being worked on.-chroncile
