Jindal Africa Moves to Finalise $350 Million Hwange Power Station Deal

Spread the love

A delegation from Indian conglomerate Jindal Africa Investments recently visited Zimbabwe to finalise a $350 million joint venture with state-owned power utility Zesa Holdings, aimed at rehabilitating six units at Hwange Thermal Power Station, the Zimbabwe Independent has learned.

Mutapa Investment Fund (MIF) chief executive officer John Mangudya confirmed the development, describing the discussions as “successful.”

“Yes, the team from Jindal was in the country to finalise the rehabilitation agreement of Hwange Units 1 to 6 with Zesa. The meetings were successful,” Mangudya said, without providing further details.

While Zesa Holdings chairperson Sydney Gata was unavailable for comment, sources disclosed that the Jindal Africa team held talks with MIF, Zesa, and the Zimbabwe Investment and Development Agency to solidify the partnership.

A Critical Step to Address Power Deficits

The joint venture, approved by MIF last year, will operate under a rehabilitate, operate, and transfer (ROT) model. The refurbishment is expected to add approximately 400 megawatts (MW) of electricity to the national grid, a crucial contribution as Zimbabwe struggles with daily power outages lasting up to 16 hours.

This investment is expected to ease the strain on businesses, many of which have been forced to rely on expensive generators. Large corporations reportedly spend as much as $300,000 monthly on fuel, significantly increasing production costs, with alternative energy sources costing up to 50% more than conventional electricity.

Government’s Commitment to Energy Security

The rehabilitation of Hwange Units 1 to 6 comes on the heels of the commissioning of Units 7 and 8 by President Emmerson Mnangagwa in August 2023. The $1.5 billion project, executed by Chinese firm Sinohydro, added 600MW to the grid.

Jindal Africa, a subsidiary of Indian multinational Jindal Steel and Power (JSP), brings substantial experience to the table. The OP Jindal Group, its parent company, operates globally across sectors such as steel, power, mining, and infrastructure, boasting an estimated worth of $12 billion and employing over 50,000 people worldwide.

Revitalising State-Owned Enterprises

The partnership aligns with MIF’s broader strategy to revamp Zimbabwe’s struggling state-owned enterprises (SOEs). MIF, which oversees 30 parastatals, is tasked with reversing the decline in SOEs’ contribution to GDP, which has dropped from 40% in the 1990s to just 12% in 2021.

Mangudya has stated that addressing power shortages is a top priority, with MIF implementing measures such as smart metering and prepaid meters to improve electricity supply and enhance debt collection. Zesa is also expanding net-metering programmes, allowing private individuals and entities with surplus energy, particularly from solar, to contribute to the national grid.

Addressing Legacy Challenges

Many SOEs, including Zesa, are burdened by legacy debts and inefficiencies. However, the partnership with Jindal Africa signals a new direction for Zimbabwe’s energy sector, offering hope for a more stable and reliable power supply.

With Hwange Thermal Power Station poised to regain its former capacity, the joint venture could play a pivotal role in addressing Zimbabwe’s energy crisis, spurring economic growth, and fostering investor confidence in the country’s industrial future.