Standard Bank lends Zim $120m to help ease power crisis

Johannesburg – Standard Bank has 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 go towards the rehabilitation of infrastructure at two of its plants. These are 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.

Standard Bank is 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.

“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 regional head of investment banking Tandiwe Njobe.

“The proceeds will be applied to significant capital expenditure which will increase capacity and improve efficiency of the power stations,” said Njobe, adding that industry and economic growth are negatively impacted if there is no reliable access to power.

She said the bank liaised with four regulatory bodies and policy makers in four ministries in Namibia and Zimbabwe. The loan will be repaid by ZPC and NamPower over a long-term power purchase agreement. This will ensure a long-term cashflow for ZPC, enabling it to raise more funding for other projects.  

“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: Eskom threatens power cuts to Zim, which owes millions

Fin24 previously reported that Eskom, which provides the Zimbabwe Electricity Supply Authority (ZESA) with power, would cut its supply if the entity does not clear R118m debt in arrears. This amounts to 300 megawatts of the 1 400 megawatts used daily in Zimbabwe.

Foreign currency shortages have seen ZESA defaulting on payment arrangements made for 2017.