In order to meet up with Eskom’s electricity supply deadline and improve power supply, the Zimbabwean power company (ZPC) has received a $120 million help from Standard Bank.
South Africa’s power utility supplying electricity to Zimbabwe warned the country last week to pay up its outstanding bills before June or face a power outage.
Buzz South Africa reported that Zimbabwe’s government-run electricity distributor, ZESA Holdings is owing Eskom over R118m from its balance as at end of March 2017.
To meet up with the deadline and to avoid being plunged into darkness, Standard Bank finalised a $120m loan facility to Zimbabwe to boost the country’s efforts to overcome its power crisis.
According to a statement issued by the bank on Monday, the loan granted to the Zimbabwe Power Company (ZPC) will be used to rehabilitate government infrastructure at two of its plants.
The two infrastructures to benefit from the fund include Kariba South Hydro Power Station and Hwange Thermal Power Station. NamPower in Namibia will also be a beneficiary, as ZPC provides power to the Namibian power utility.
“This funding will assist in improving access to power for Zimbabwe and Namibia, and in the medium to long-term, benefits of improved power supply and reliability will also extend to other Southern African Power Pool members,” said the regional head of investment banking Tandiwe Njobe.
“The proceeds will be applied to significant capital expenditure which will increase capacity and improve the efficiency of the power stations,” said Njobe, adding that the country’s industrial and economic growth will be greatly affected if electricity power is cut off.
This will also be an additional blow to the country following the state of poverty and socio-economic challenges already drowning the country.
Njobe also noted that the bank liaised with four regulatory bodies and policy makers in four ministries in Namibia and Zimbabwe. The bank is also partnering with the Eastern and Southern African Trade and Development Bank to finance the loan, which is the extension of an earlier loan granted to ZPC for Kariba.
“It was important for us to support the regional power sector through this loan facility,” said Njobe. The region has an ongoing deficit and requires dependable and sustainable power supply.
Read Also: Trump To Fund Zimbabwe’s Health Sector
ZPC and NamPower are expected to repay the money over a long-term power purchase agreement. This will ensure a long-term cash flow for the ZPC as it would also enable it to raise more funding for other projects.