Renewed interest in $1,2bn RioZim project

Renewed interest in $1,2bn RioZim project
Mine

Sengwa has reserves of 1,3 billion tonnes of coal and RioZim anticipates to tap into this to help ease power shortages in Zimbabwe which presently consumes 1 400 megawatts (MW) daily, down from 2 200 MW a decade ago.

LISTED resources firm, RioZim, says investors have renewed their interest in the $1,2 billion Sengwa thermal power project, after being scared away by policy somersaults and currency instability, which saw the introduction of bond notes in 2016.
RioZim chief executive officer, Bheki Nkomo, on Tuesday told delegates at a Mining Investors Conference that the firm lost the investor following an announcement that the country was set to introduce bond notes in 2016. The bond note, a parallel currency pegged at parity with the United States dollar and backed by a $200 million loan from the African Export Import Bank, was introduced in a bid to ease an acute shortage of greenbacks, Zimbabwe’s adopted currency since 2009.
The introduction of the bond notes stoked fears of rampant money printing and a return of hyperinflation, which peaked at 500 billion percent in December 2008 leading to the adoption of mulitple foreign currencies, chiefly the US dollar and South Africa’s rand.
“Next week we are also entertaining another group of investors that we have been in discussions with for the past two years. When we changed some policies and introduced bond notes, they developed cold feet, but after the pronouncement that Zimbabwe is open for business, they have come back,” Nkomo said.
Nkomo pointed out that the firm had witnessed increased interest in the project from investors following President Emmerson Mnangagwa’s business oriented foreign policy.
“This project will require an investment of US$1,2 billion. After the new pronouncements and changes in the business environment, we have had an increase in the interest in this project,” he said.
Sengwa has reserves of 1,3 billion tonnes of coal and RioZim anticipates to tap into this to help ease power shortages in Zimbabwe which presently consumes 1 400 megawatts (MW) daily, down from 2 200 MW a decade ago.
The decline in consumption was due to the collapse of the industrial sector. The country imports about 400 MW from South Africa and Mozambique to supplement its 842 MW output as at end of May.
The Sengwa project — anticipated to result in the generation of 2 000 MW of power — has been on the cards since the 1990s, but RioZim, which began actively pursuing the project in 2014, has been failing to secure financial support to help the mooted thermal project take off.
Nkomo said the group was going to execute the project in phases.
“We have a well explored coal resource which has 1,3 billion tonnes of ore and there is potential for us to set up a power station of up to 2 000 MW. We have decided to do that in phases of 700 MW each,” he said.
Nigerian billionaire, Aliko Dangote — who expressed interest in power generation investments when he visited the country in 2015 — reportedly considered partnering with RioZim through Black Rhino Group, a $5 billion African infrastructure fund in which US private-equity group, Blackstone Group LP, is a co-investor.
The plan for the Sengwa power plant was designed by Beijing-based, State-owned Chinese company, State Nuclear Electric Power Planning Design and Research Institute.
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