China Export and Credit Insurance Corporation, otherwise known as Sinosure, has put on hold the process to guarantee a loan for the planned expansion of the Hwange Thermal Power Station, until Zimbabwe settles its debt of $7,2 million owed to the company.
Sources close to local media the Herald, disclosed that the Sinosure debt was the stumbling block to the conclusion of the project.
“That is the major challenge at the moment with regards to Hwange Power station expansion. Sinosure is refusing to guarantee the loan until Zimbabwe pays about $7,2 million that it owes that company,” the source said.
Hwange Thermal Power Station expansion on pause
According to media, Zimbabwe signed a concessionary loan agreement with China Export and Import Bank for the power expansion project during President Mugabe’s State visit to Beijing in 2014.
In addition to validating the funding agreement, finance and economic development minister Patrick Chinamasa, signed an additional agreement with Sinosure to guarantee the loan.
The agreements were further consolidated during Chinese President Xi Jinping’s reciprocal State visit to the country in December last year, where deals worth an estimated $4 billion were signed.
The Hwange Thermal Power Station expansion project is expected to add 600MW to the national grid from new units seven and eight.
ZESA spokesperson, Fullard Gwasira, told media that following the signing of the loan agreement in December last year, pre-commencement activities such as topographical and geotechnical surveys have already been completed.
“Financial closure has not yet been reached as the relevant consultations are being done to meet the requirements of the project,” Gwasira stated.
He added: “Progress is still within the set timelines and the relevant conditions and formalities are being explored to ensure that closure is reached. Engineering Procurement and Construction (EPC) is expected to officially commence late 2016 to early 2017 after financial closure.”
Featured image: Ngage Media Zone