Finance and Economic Development Minister Patrick Chinamasa by Financial Gazette
By the Financial Gazette
ZIMBABWE has signed a US$87 million credit facility with the Export-Import Bank of India to fund the upgrading of one of its key power stations, as government battles to deal with a power crisis that has worsened in the past two months.
The deal, signed by Finance and Economic Development Minister Patrick Chinamasa last week, will result in the upgrade of the Bulawayo Thermal Power Station. The loan will be repaid over 10 years, with a grace period of three years, according to a statement issued by government Thursday.
Zimbabwe will pay an interest of two percent per annum, according to the statement issued by Chinamasa.
“The implementation of the project will indeed improve the supply of electricity which will in turn improve economic performance as it reduces the cost of production and reliability of power. What our economy requires is uninterrupted power supply to improve efficiency of industrial activities. The project is earmarked to be completed in three years and I urge all those involved in the implementation of the project to expedite the selection of consultants,” said Chinamasa.
He said the deal with the Export-Import Bank of India was part of a broad strategy by Zimbabwe to increasingly foster trade and economic ties with a block of the world’s fastest developing countries known as the BRICS.
The countries are Brazil, Russia, India, China and South Africa.
After political tensions with the west which started in 2000 led to a decline in funding flows from Europe and America, Zimbabwe has been pursuing a Look East Policy.
Export Import Bank of India has previously provided US$28,6 million for upgrading the Deka Pumping station in Hwange, US$49,9 million for vehicle purchases for the Ministry of Tourism and Hospitality Industry and US$13 million for Hwange Colliery Company Limited to purchase spares.
“The facility is one of the fruits of our accelerated re-engagement with the BRICS countries and pursuance of our Look East Policy,” Chinamasa said.
Zimbabwe is at the grip of a power crisis that has seen government, through the State run power monopoly, ZESA Holdings looking for financial lifelines to deal with the problem.
Electricity problems in Zimbabwe have affected the growth of businesses, which have been in crisis since hyperinflation kicked off in 2000.
After hyperinflation in 2008, the market has been hit by deflation. But the Confederation of Zimbabwe Industries as on Wednesday the power crisis was one of the major issues now confronting the manufacturing industry.
The consequences have so far been disastrous, with even waterworks being affected by the power crisis. Families complained of water cuts, which sparked fresh fears of epidemic diseases associated with water shortages.
But it is clear that the unrelenting power crisis that has crippled the nation has not been met with a sense of urgency.
Clearly, the country’s politicians and their technocrats are now desperate, but moves by Chinamasa to seek financial lifelines and renegotiate loan deals have been seen at positive steps towards ending the crisis.