Riozim may be close to a breakthrough that has eluded it over a long time, as it emerged that it had shortlisted two prospective foreign investors interested in funding the mining group’s longstanding $1,5 billion power project in Sengwa, Gokwe North.
Business Weekly is reliably informed that Zimbabwe Stock Exchange listed RioZim had picked two serious potential investors for the project, out of 12 that submitted bids, marking significant headway in protracted efforts to secure investors.
RioZim has reportedly signed non-disclosure agreements with the foreign investors, who are scheduled to send in due diligence teams in February next year to evaluate the power project. The investors have already started investing in the process.
The Sengwa coal power plant project has been on the cards since 1994.
Chief executive Bheki Nkomo recently said the company was looking for investors with a track record in the projects such as Sengwa. As such, RioZim was scouting for investors China, India, Japan and South Africa, but not western countries, which would not support coal projects over environmental concerns.
However, Nkomo could not be reached for official comment this week, as he would not pick call to his mobile phone.
The company intends to build a power station based on a coal resource of 1,3 billion tonnes, capable of generating up to 2 000MW of power, almost as much as Zimbabwe’s total installed capacity.
Highly placed sources told Business Weekly this week that after the visits planned for early next year; the potential investors would soon after undertake feasibility studies on the project.
The proposed power project envisages the construction of a number of smaller power plants over a period of ten years. In order to achieve this goal, RioZim is in the process trying to bring in technical partners to help in constructing the power station.
“We have shortlisted two investors who are serious about the project. One is from South Korea and the other is from China. We have already signed non-disclosure agreements with them. A total of 12 potential investors had submitted their bids.
“The two potential investors will send their teams to Zimbabwe in February next year for pre-feasibility studies and accessing of appropriate funding models for the Sengwa project. We are not at liberty at this point to reveal the names of the investors due to non-disclosure agreements we signed.”
RioZim was forced to refloat its tender aimed at raising funding from global investors to finance the planned 1 200 megawatt Sengwa thermal power project in Gokwe North, after initial efforts to find suitors in China failed to yield results.
It once secured an interested Chinese funder, a State owned company, but the deal fell through as it could not be approved by the Government because it needed to be restructured since it also had no experience of investing overseas
The mining group is seeking roughly, about $1,5 billion for the composite project, which has constituent parts that will entail the development of a coal mine, thermal power plant, water pipeline to the power station and a transmission line to the main grid.
RioZim, which has mining interests in gold, diamond and nickel processing also needs funding to build a residential location where workers at the power plant and coal mine will reside.
RioZim said mid-last year that RioZim had received many expressions of interest, most of which never materialized and at the time only Nigerian billionaire Aliko Dangote and a Chinese firm had recently shown “more aggression” for the project.
The Sengwa power project is based on a coal resource of 1,3 billion tonnes.
RioZim had recently widened its net targeting investors across the globe, especially financiers in Japan, India, China and South Africa. The request for funding proposals closed this week, however, RioZim may extend the window period depending on interest.
The project is part of several independent power projects licensed by Government, including as part of efforts to resolve the country’s power deficit. Due to limited installed power generation capacity, Zimbabwe can only produce 1 000MW while demand at peak periods stands at an average 1 400MW.
Interest in the Sengwa project, which has been outstanding since the early 1990s has increased amid growing power shortage in Southern Africa, which has an installed capacity of 52 598 MW against a demand of 49 563 Mw. Output, however, stands at 46 910MW giving the region a shortfall of 8 247MW.