Dormant independent power generation licences to ...

Dormant independent power generation licences to be canceled

Zim Now Writer

The Zimbabwe Energy Regulatory Authority is set to review Independent Power Producers licences with the view to revoke those that are dormant.

This was revealed by Energy and Power Development Deputy Minister Magna Mudyiwa while responding to questions in Senate yesterday.

She said it has emerged that most IPPs applied for licences without funding.

Mudyiwa said the country could have been getting in excess of 2 000 megawatts from IPPs if these had moved forward, compared to a measly 15 MW that is being produced at the moment.

“There were IPPs with no money and they started looking for money when they got the licences. If all IPPs had solar plants as what they had claimed when they applied for licences, we could have over 2 000MW coming from IPPs onto the grid,” said Mudyiwa.

According to the ZERA website there are 30 IPP licence holders with the capacity to produce almost 200MW. Zimbabwe Zhongxin Electrical Energy is the largest, listed for a potential 50MW followed by Hippo Valley Estates at 39MW, Green Fuel at 18.3 and Pungwe B Station at 15.25MW.

All the other 26 IPP license holders are listed for capacity between 0.101MW and 5MW.

The Deputy Minister added: “We have told ZERA to relook at the licences they issued. Some were holding on to licences for more than five years. Others are using the electricity they generate for their own consumption and not directing any to the national grid.”

Legislators indicated that some IPP licence holders were holding on to the certificates for speculative purposes and also noted that no due diligence in interrogating the applications was done, which resulted in undeserving persons getting the licences.

This comes as the country is experiencing one of the worst power crises in history as low water levels have resulted in low generation at Kariba Hydro-Electric Power Station while frequent breakdowns have also compromised capacity at the Hwange Thermal Power Station.

One IPP holder who has not produced anything said that the field has proven more difficult than expected.

“We thought it would be easy to get investors as power is something that is in short supply and will always be needed. But it has not been easy. Setting up is capital intensive and the current policies are not conducive. Getting someone to invest a huge amount of US dollars for the set up, then you are paid for the electricity you generate in local currency at below cost rates just does not make any business sense,” the licence holder said.

"Yes, government can cancel our licences. But that will not solve the problem. They must look at making the power generation industry a commercially viable one. if government wants to subsidise power costs, it must do so itself and not expect power generating business to carry its load. That will just not work, no matter who they award the licenses to.

The source said if the field had real opportunities, by now those who have held licences for five years would have upped capacity to maximise returns and there would be a natural flock of applicants also wanting to cash in on the opportunity.

"Zimbabwe has lots of sunshine and lots of land. A lot of land is lying idle in rural areas because they are in the dry regions and climate change has made rain-fed agriculture a dead end most seasons. If power generation was a real business opportunity in Zimbabwe, by now I tell you many villages would have solar farms which in turn would be providing power for boreholes to irrigate horticulture ventures.

“We would not be talking of power shortages but power exports and a thriving base economy because access to electricity is one of the biggest grassroots empowerment drivers.”

Authorities have recently announced that they have managed to secure a contract to import 500MW from Zambia and Mozambique and will be be reducing load shedding periods.