COSTS of constructing the 2 400 megawatt (MW) Batoka hydroelectric power station have spiralled to about US$5 billion, from the US$2,5 billion budget worked out when the project was conceived in 1993, a Zambezi River Authority (ZRA) official said last week.
ZRA is a joint venture company controlled by Zimbabwe and Zambia, which has the mandate to manage the Zambezi River basin and Kariba Dam.
Batoka power station’s turbines were expected to start turning in 2001, as the neighbours took steps to provide enough electricity to their countries.
Poor funding has, however, delayed the project 23 years on.
In the meantime, costs have been advancing northwards.
ZRA chief executive officer, Munyaradzi Munodawafa told the Financial Gazette’s Companies & Markets (C&M) in Kariba last week that recent studies have indicated that Harare and Lusaka could spend at least US$4,5 billion to construct the power station.
“From the feasibility studies we are doing, we are now talking of about US$4,5 billion, and the appetite (to fund the project) is there,” Munodawafa told C&M.
“This means the costs for setting up the Batoka hydro power project have almost doubled from about US$2,5 billion at conception 23 years ago,” he said.
This will be a toll order for the two countries, whose populations have grown and are facing several challenges that include the prolonged slide in global commodities prices such as copper and platinum.
In addition, Zimbabwe and Zambia will have to commit substantial resources towards the importation of grain in order to feed millions of people facing food shortages due to drought.
Batoka will be the second major power project shared by Zimbabwe and Zambia on the Zambezi River.
The two countries already share the Kariba Hydroelectric power station, whose capacity to meet this electricity needs has been undermined by declining water levels at Lake Kariba.
Prolonged droughts in the basin are threatening the power plant, which has scaled down generation on the Zimbabwean side to 285MW.
Kariba has an installed capacity of 750MW.
Construction of Batoka would therefore hinge on whether water levels in the Zambezi recover to sustain at least three big power stations on its course.
Initially, Zimbabwe and Zambia intended to construct Batoka on a Build, Operate and Transfer (BOT) basis.
But Munodawafa said they had switched to a public-private partnership model, with ZRA expected to source funding for the project.
“A decision has been made in terms of the model. It is not (going to be) BOT anymore. It is going to be the PPP model. ZRA is going to source funding for the dam, but when you talk of ZRA you are talking of two governments,” said Munodawafa.
He said the project was now awaiting completion of an update of feasibility studies and an Environmental Social Impact Assessment (ESIA) that started in 2014, funded by the World Bank.
The feasibility study is expected to be completed in July at a cost of US$3,6 million.
A South African company, Environmental Resources is undertaking the ESIA at a cost of US$1,3 million.
The studies would recommend mitigation measures for identified negative environmental and social impacts in line with the Environmental Act, which stipulates that such studies should be re-done if three years lapse before a project commences.
Munodawafa said the next step for ZRA would be to consider bids for companies that have submitted expressions of interest to build the power station.
“The updating of the feasibility studies is progressing very well. We are now at the concluding stages. We are finishing these (studies) because they are two pertinent (processes). By the end of July we should have them (ready),” he said.
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