China’s Export and Import Bank has lent Zimbabwe $319 million to fund the expansion of a hydro-power station that is expected to ease the country’s huge electricity deficit.
The Kariba Power Station project will comprise of two 150 megawatt power stations, increasing the country’s largest hydro power plant’s generating capacity to 1,050 megawatts.
“This should go a long way in reducing power outages that characterize our power generation,” Finance Minister Patrick Chinamasa said at a ceremony to conclude the deal in Harare on Monday. “For us the energy deficit has hamstrung the economy.”
The loan has a two percent interest rate and would be repaid over 20 years with a five year grace period.
Zimbabwe would contribute $35 million to the project that is expected to cost $354 million. The expansion would be spearheaded by Chinese company Sinohydro, which won the tender last year.
Zimbabwe only generates 1,200 megawatts of electricity against demand of over 2,200 megawatts, with the deficit being met by imports from Mozambique and the Democratic Republic of Congo although failure to pay suppliers has often led to massive load shedding.
Industry has borne the brunt of the massive power cuts experienced in Zimbabwe with companies forced to rely on expensive alternatives such as generators, with daily blackouts lasting up to 15 hours.