INVESTMENT OPPORTUNITIES IN INVESTMENT OPPORTUNITIES IN THE ZIMBABWEAN POWER THE ZIMBABWEAN POWER

SECTORSECTOR

PRESENTED AT ESI POWER INDABA CONFERENCE, DURBAN SOUTH AFRICA

by: Eng. B. RafemoyoZESA HOLDINGS (PVT) LTD GROUP CHIEF EXECUTIVE OFFICER

CONTENTS

� Overview of Zimbabwe� Background � The Zimbabwe Electricity Supply Industry

Overview � The Power Supply Status� Mitigation Measures to meet Growing National &

Regional Demand� Project Information Reports � Conclusion

OVERVIEW OF ZIMBABWE

� The establishment of the GNU (Government of National Unity) has created a stable Political environment.

� Inflation has been tamed and is now stable. � A projected GDP of 10% for 2010.� There has been a shift from -ve to +ve real interest rates.� The International Community has been re engaged and high

Profile International Investors conferences have been successfully carried out .Congruency of Policy of the three Political Principals on economic recovery has been demonstrated.

� Commitment to guarantee private property rights was given

BACKGROUND

� We have a current Generation Deficit of above 600MW, while the economy is rising from the 2008 world financial crisis.

� The Economy is rebounding and the Suppressed Demand (over 2200MW) due increased Industrial/ Mining/Farming & Commercial capacity utilisation will soon be a reality.

� Due to the increasing Regional Power deficit SADC member States are being encouraged to engage in Generation and Transmission projects that promote self sufficiency and cross border power trade.

BACKGROUND

� Zimbabwe has a potential Power Generation resource of up to 9000MW from Coal, Gas and Hydro. Major projects for investment discussions have been identified. Excluded in this presentation are the abundant renewable resources such as wind and Sun etc.

� Zimbabwe sits centrally in the region and will strategically be the most logical transit route for power movement, be it North, East or South. The National Grid transfer capacity is currently limited to 300MW exports and with new reinforcement projects above 1000MW would be exportable .

2

SAPP GRID

Dem Repof the Congo

CongoGabon

Luanda

Windhoek

Lusaka

Harare

Lilongwe

Nairobi

Dar es Salaam

GaboronePretoria

Johannesburg

Cape Town

MaputoMbabane

KinshasaBrazzaville

Angola

Tanzania

Kenya

Mozambique

South Africa Swaziland

Lesotho

Namibia

Zambia

BotswanaZimbabwe

Malawi

Rwanda

Burundi

H

H

H

H

H

H

H

H

H

H

HH

H

H

HH

H

P

PH

H

T

T

T

T

ET

ET

ETETET

ETETETETET ET

ET

ET

T

HH

H

TH

P

N

HH

Hydro stationPumped storage schemeThermal StationEskom thermal station

BACKGROUND

� Investments in Power Generation and Transmission projects have been deregulated for participation by the private sector (IPPs) and triple Ps (PPPs).

THE ZIMBABWE ELECTRICITY SUPPLY INDUSTRY OVERVIEW

� The Electricity Industry is governed by the new Electricity Act Chapter 13:19 (2003) and Chapter 13:20 (2002) for the Rural Electrification Fund.

The Reforms from the Act� The Zimbabwe Regulatory Commission was

established.

� ZESA was unbundled into successor companies

� A Rural Electrification Agency was established

THE ZIMBABWE ELECTRICITY SUPPLY INDUSTRY OVERVIEW

Reform Benefits� Power Generation deregulated to promote

investment by IPPs and PPPs in generation.

� None core ZESA activities were ring fenced from the tariff chargeable to customers.

� The Act called for the adoption of the Cost Reflective Pricing Model for Tariffs.

THE ZIMBABWE ELECTRICITY SUPPLY INDUSTRY OVERVIEW

Generation

Power Source Installed capacity MW

DependableCapacity MW

Currently available MW

Hwange 920 780 350

Kariba 750 750 750

Small Thermals

220 170 0

Total 1890 1700 1100

THE ZIMBABWE ELECTRICITY SUPPLY INDUSTRY OVERVIEW

Typical Tariffs Levels� Domestic 6-8.5USc/kWh� Mining 5-7.0USc/kWh� Commercial 5-7.0USc/kWh� Institutions 5-7.0USc/kWh� Agriculture 5-7.0USc/kWh

Average tariff is 7.53USc/kWh

THE POWER SUPPLY STATUS-SOURCES

Source Capacity Remarks

Internal 1100MW 90% from Kariba

External 200-300MW 90% from HCB

Total 1 300MW-1400MW

POWER SUPPLY SOURCES-INTERNAL

Sources Dependable capacity

Current performance

Remarks

Hwange 780MW 350MW Resources Required for repairs

Kariba 750MW 745MW Base load

Small thermals

200MW 0MW Major Repairs & Coal supply constraints

ZIMBABWE POWER STATIONS

IN S T A L L E D G E N E R A T IO N IN S T A L L E D G E N E R A T IO N

C A P A C IT YC A P A C IT Y

H w an ge P o w e r S ta tio n (78 0 M W )

K arib a Po w e r S ta tio n (75 0 M W )

B u la w a yo Po w e r S ta tio n (60 M W )

H a ra re P o w er S ta tio n (45 M W )

M u n ya ti P o w e r S ta tio n (70 M W )

NATIONAL GRIDNATIONAL TRANSMISSION GRID NATIONAL TRANSMISSION GRID NATIONAL TRANSMISSION GRID NATIONAL TRANSMISSION GRID NATIONAL TRANSMISSION GRID NATIONAL TRANSMISSION GRID NATIONAL TRANSMISSION GRID NATIONAL TRANSMISSION GRID

REINFORCEMENT & EXTENSION REINFORCEMENT & EXTENSION REINFORCEMENT & EXTENSION REINFORCEMENT & EXTENSION REINFORCEMENT & EXTENSION REINFORCEMENT & EXTENSION REINFORCEMENT & EXTENSION REINFORCEMENT & EXTENSION

MOZAMBIQUEZAMBIA

Kariba

MutorashangaAlaskaAlaskaAlaskaAlaska

BinduraBinduraBinduraBindura

NortonNortonNortonNorton

HWANGEHWANGEHWANGEHWANGE

Empress

SherwoodSherwoodSherwoodSherwoodHaven

ChertseyChertseyChertseyChertseyKEY

Insukam iniEXISTING HYDRO POWER STATIONS

Manada

MarvelMarvelMarvelMarvelTokwe

EXISTING 420kV Lines

Plumtree

Triangle

RSARSARSARSA Beitbridge

EXISTING 330kV LINES

LUPANELUPANELUPANELUPANE

KARIBA KARIBA KARIBA KARIBA

SOUTH EXTNSOUTH EXTNSOUTH EXTNSOUTH EXTN

BOTSWANABOTSWANABOTSWANABOTSWANA

3I5 km

305 km

250 km

DemaDemaDemaDema

Munyati P/S

Harare P/S

Byo P/S

2x30kmI50 km

BULK POINT CAPACITY INCREASE

Orange Grove

NEW BULK SUPPLY POINTS

BULK POINT TRANSFORMER REPLACEMENT

255 km

200 kmWarren

BATOKABATOKABATOKABATOKA

NEW THERM AL GENERATION

NEW HYDRO GENERATION

EXISTING THERM AL POWER STATIONS

2 X 70km

PROPOSED 420kV Lines

LINE UPRATE

PROPOSED 330kV LINES

HarareHarareHarareHarareGOKWE NTHGOKWE NTHGOKWE NTHGOKWE NTH

ChakariChakariChakariChakari

NEW G AS GENERATION

MITIGATION MEASURES TO MEET GROWING NATIONAL & REGIONAL DEMAND

� Demand Side Management

� Refurbishment

� Expansion

� Greenfield

MITIGATION MEASURES TO MEET DEMAND

� Demand Side management� Reduce demand to save 300MW

@USD80million over 3yrs� Replace all incandescent lamps� Install water heater demand control� Modify tariff to incentivize off peak use

MITIGATION MEASURES TO MEET DEMAND-REFURBISHMENT

� USD100m required to refurbish Hwange to push production from 350MW to 780MW by June 2010

� USD40m required to boost Small Thermals output from 0 to 220MW

MITIGATION MEASURES TO MEET GROWING DEMAND-EXPANSION

� Hwange Stage III -2X300MW @ USD600m by 2015.

� Kariba South-2X150MW @ USD400m by 2016.

� Develop Central Transmission Corridor to achieve power transferability of 1000MW

MITIGATION MEASURES TO MEET GROWING DEMAND-EXPANSION

� CTC developing 2 projects at USD190m

Central Transmission Corridor- Akaska - Sheerwood (160km) @ USD50m- Bindura - Mutorashanga (80km) @ USD30m- Marvel Insukamini (40km) @ USD20- Dema SVC @ USD50

ZIZABONA Phase I- Hwange to Livingstone Line (100km) @ USD40m

ZIMBABWE TRANSMISSION INFRASTRUCTURE

ZIMBABWEZIMBABWEZIMBABWEZIMBABWE POWER DEVELOPMENT PLANPOWER DEVELOPMENT PLANPOWER DEVELOPMENT PLANPOWER DEVELOPMENT PLAN

MOZAMBIQUEZAMBIA

Kariba

MutorashangaAlaskaAlaskaAlaskaAlaska BinduraBinduraBinduraBindura

NortonNortonNortonNorton

HWANGEHWANGEHWANGEHWANGEEmpress

SherwoodSherwoodSherwoodSherwoodHaven

ChertseyChertseyChertseyChertsey

Insukamini

EXISTING HYDRO POWER STATIONS

Manada

MarvelMarvelMarvelMarvelTokwe

EXISTING 420kV Lines

Plumtree

Triangle

RSARSARSARSABeitbridge

EXISTING 330kV LINES

LUPANELUPANELUPANELUPANE

KARIBA KARIBA KARIBA KARIBA

SOUTH EXTNSOUTH EXTNSOUTH EXTNSOUTH EXTN

BOTSWANABOTSWANABOTSWANABOTSWANA

3I5 km

305 km

DemaDemaDemaDema

Munyati P/S

Harare P/S

Byo P/S

2x30kmI50 km

Orange Grove

255 km

200 km Warren

BATOKABATOKABATOKABATOKA

NEW THERMAL GENERATION

NEW HYDRO GENERATION

EXISTING THERMAL POWER STATIONS

2 X 70km

PROPOSED 420kV Lines

LINE UPRATEPROPOSED 330kV LINES

HarareHarareHarareHarareGOKWE NTHGOKWE NTHGOKWE NTHGOKWE NTH

ChakariChakariChakariChakari

NEW GAS GENERATION

Livingstone

CONDO

250 km

Gairezi Mini Hydro

Osborne Mini Hydro

Siya Mini Hydro

Mutirikwi Mini Hydro

Manyuchi Mini Hydro

Rusitu Mini Hydro

310km

385 km

WESTERN WESTERN WESTERN WESTERN

POWERPOWERPOWERPOWER

Total Potential > 9000MW

MITIGATION MEASURES TO MEET DEMAND GREENFIELD PROJECTS

� Develop 152MW minihydros at a cost of USD150m.

� Construct 300MW Lupane methane gas power station @ USD300million.

� Construct 8x200MW Batoka hydro power station @USD 2 400 million.

� Construct 4X350MW Gokwe North thermal power station @USD 1 600 million.

PROJECT INFORMATION REPORTS

PROJECT NAME

REPORTS STATUS

Hwange Stage III

Feasibility studies were last reviewed in 2003 by WAPCOS

Kariba South Ext Feasibility studies were last reviewed in 2004 by WAPCOS

Gokwe North Feasibility studies were last reviewed in 1997 by National Power, ZESA and Rio Tinto

PROJECT INFORMATION REPORTS CONT’D

PROJECT NAME

REPORTS STATUS

Batoka Gorge Feasibility studies were done in 1993 by Lahmeyer International, Knight Piesold Consulting Engineers & EWI Engineers

Lupane methane Gas

Studies have not yet been done

PROJECTS INFORMATION REPORTS

� Project information reports for the following projects are available at ZESA and can be given to prospective investors

– Kariba South Extension Power Station– Hwange Stage III Thermal Power Station– Central Transmission Corridor Reinforcement and

Expansion– Batoka Hydro Power Station– Minihydros Power Stations– Gokwe Thermal Power Station– Small thermal power stations Refurbishment– Demand side management

LOW CASE BASE CASE HIGH CASE

(MW) (MW) (MW)

2009 1806 1942 1942

2010 2095 2428 2428

2011 2157 2816 2816

2012 2222 3126 3126

2013 2289 3376 3376

2014 2357 3511 3511

2015 2428 3651 3651

2016 2489 3797 3797

2017 2551 3949 3949

2018 2615 4107 4107

2019 2680 4272 4272

2020 2747 4442 4442

FORECAST MAXIMUM DEMAND 2009 TO 2029

LOW CASE BASE CASE HIGH CASE

(MW) (MW) (MW)

2021 2816 4620 4620

2022 2886 4805 4805

2023 2959 4997 4997

2024 3033 5197 5197

2025 3108 5405 5405

2026 3186 5621 5621

2027 3266 5846 5846

2028 3347 6080 6080

2029 3431 6323 6323

FORECAST MAXIMUM DEMAND 2009 TO 2029

FORECAST (MW)

0

1000

2000

3000

4000

5000

6000

7000

2009 2010 2011 2012 2013 2014 2015 2016 2017 2018 2019 2020 2021 2022 2023 2024 2025 2026 2027 2028 2029

years

MW FORECAST (MW)

CONCLUSION

� Zimbabwe has numerous investment opportunities in the power sector

� Please come and invest in Zimbabwe

Thank You