Failure by Government to clear arrears to China Export and Credit Insurance Corporation (Sinosure) is scuttling funding for the 100 megawatt Insukamini solar project in Bulawayo. China Export and Credit Insurance Corporation is a state-funded policy-oriented insurance company that promotes China’s foreign trade and economic cooperation.
The arrears to Sinosure have forced China Exim Bank to stop advancing loans to the country’s energy projects being spearheaded by the Zimbabwe Power Company (ZPC).
The Insukamini solar project is a joint venture between the ZPC and ZTE Corporation.
The contract for the project was signed on October 23, 2015 following a due diligence exercise, and ZTE Corporation together with ZPC, applied for a concessionary loan of $124 million for the project from the Chinese financier.
ZPC acting managing director Joshua Chirikutsi confirmed to Business Weekly that China Exim Bank had frozen loans going towards energy projects namely the Hwange 7 and 8 and ZTE’s Insukamini solar project.
“Of late there have not been any loan funds coming from China Exim Bank and we have been waiting to get funding for the solar project. The same challenge has also affected Hwange 7 and 8 and from my understanding the reluctance to release funds by the Chinese Bank has been due to Government’s debts to Sinosure.
“An application of $124 million, which is 85 percent of the contract price was applied for through the Ministry of Finance and Economic Development last year. We are still following up on a response from them,” said Chirikutsi.
Finance and Economic Development permanent secretary Willard Manungo told the Business Weekly late last year that China Exim Bank had been holding on some funds until the Government cleared its arrears to Sinosure.
Long delays in the repayment of the debt by Government has had a negative impact on several multi-billion dollar energy and telecommunications projects in the country.
However, there are indications that Government is in the process of mobilising funds to settle a debt that has frustrated critical projects, including the expansion of Hwange 7 and 8 thermal power stations worth $1, 1 billion.
Sinosure is a state funded insurance group spearheading China’s foreign trade and economic programmes.
Reserve Bank of Zimbabwe governor Dr John Mangudya in an interview with this publication also confirmed that there had been challenges in accessing funds from China Exim Bank due to the arrears to Sinosure, which assumes debt if a borrower defaults.