NamPower and ZPC sign Power Purchase Agreement

17 Oct 2014 09:00

NamPower and the Zimbabwe Power Center (ZPC) last week signed a Power Purchase Agreement which entails ZPC selling 80MW of Kariba Power Station Power to NamPower for the next 15years.

The cooperation between the two countries started in 2006 when NamPower and ZESA embarked on a joint project development to rehabilitate the Hwange Power Station in Zimbabwe. NamPower then availed U$40m to ZESA holdings to rehabilitate units 1 to 4 of the Hwange Power Station.

In return ZESA provided NamPower with 150 MW for a period of 5 years as part of the repayment of the loan, in 2008 the agreement became effective and was extended to a further two years. NamPower and ZPC recently began trading power during off peak periods in addition to the existing 150 MW Hwange agreement.

 Speaking at the signing Minister of Mines and Energy Isak Katali said the Southern African region is working hard and has adopted long term measures to address the energy deficit and to ensure self -sufficiency in energy generation through an ambitious Energy Sector Plan. The plan calls for the region to increase power generation by 70% and to invest billions in power generation over the next 15 years. Katali stated that Energy trading in the Southern African is also limited by transmission constraints. “SADC member states should also speed up the implementation process of ZIZABONA, the transmission projects between, Zimbabwe, Zambia, Botswana and Namibia to help relieve congestion in the transmission network. The region is working hard and ahs adopted long term measures to address the energy deficit and to ensure self- sufficiency in energy generation through an ambitious Energy Sector Plan. The plan calls for the region to increase power generation by more than 70% and to invest billions in power generation over the next 15 years”.

Zimbabwe Power Company a subsidiary of ZESA Holdings is responsible for power generation. ZPC is extending the750 MW Kariba Hydro power station by an additional 300 MW. The project which will cost U$533 million, is expected to be commissioned in 2017. The NamPower- ZPC Power Purchase Agreement is intended to securitize part of the funding for the project. The agreement will also increase capacity building and information exchange on energy between the two countries. The PPA forms part of ZPC’s strategy to raise funds to enable them to expand the Kariba South Hydro Power Station in Zimbabwe by 300 MW.

The current capacity of the power station is approximately 700MW and will be approximately 980MW after the expansion. This agreement will become effective once the existing ZESA agreement comes to an end early next year. The agreement will become effective not later than 1 April 2015. The agreement is structured to supply up to a total of 450 GWh in a calendar year and is profiled to supplement the seasonality of Ruacana. The term of the agreement is 15 years but the capacity will have the option to be reduced to 50 MW after 10 years from the date of coming into operation of the agreement.