ENGINEERING works and manufacturing of major equipment like transformers and switchgear for the 100km extension to the core 330 kilovolt national electricity grid Zesa is installing for the new giant steel mills at Manhize in Chivhu has started with construction set to begin this month.
The US$66 million electrification project is being funded under a loan from Dinson Iron and Steel Company (Disco), the operational arm of the giant Chinese steel producer, Tsingshan Holdings.
The company is setting up a steel-manufacturing plant in Chivhu to the tune of US$750 million, plus coke ovens and its own thermal power station in Hwange.
The total investment, which the Government has granted national project status, is expected to have its first steel blast furnace up and running by September next year with blast furnace equipment already delivered to Manhize.
The site chosen for the steelworks, right on the huge deposits of iron ore, the principal raw material, needed a connection to the core trunk grid run by Zesa’s transmission subsidiary, ZETDC.
Manhize is connected to the national grid, but not to the top-end 330kV trunk grid. The new connection with the steel mill at Manhize is being connected to the trunk grid at Sherwood near Kwekwe.
That connection will also be able to reinforce supplies to other industries in the area, and that sort of industry is likely to be developed as other investors start manufacturing operations using Manhize steel.
In an interview, project manager for the 100km trunk grid extension, Engineer Edson Manyewe, said some of the preliminary works already done include feasibility study, environmental and social impact assessment report, Environmental Management Agency certification and resettlement action plan.
People living under or very close to the trunk grid need to be moved, with full compensation and alternative land.
Other milestones that had been covered by July 27 include the signing between ZETDC and Disco of the transmission connection agreement, bridging finance agreement, and the public-private partnership agreement.
Eng Manyewe said 100 percent funding for the project had also been secured by Dinson through Ecobank and Stanbic Bank.
“Notwithstanding the fact that the contract was signed on July 11, the contractor, who is also the manufacturer of major equipment for the project, has already commenced engineering works with design works for major equipment like transformers and switchgear already in progress.
“This initiative will speed up the project completion significantly,” he said.
Giving background to the project, Eng Manyewe, who is also the ZETDC Network Development Engineer, said Dinson Iron and Steel Company applied to ZETDC for connection to the grid indicating a power requirement of 100MW by May next year for Phase 1 that will rapidly rise to 500MW on second phase by end of 2023.
“This request meant that a 100km long 330kV transmission line would have to be constructed in order to move power from the existing Sherwood Substation in Kwekwe to the Dinson 2x175MVA, 330kV to 33kV substation at Dinson’s Iron and Steel manufacturing plant at Manhize in Chivhu.
“Unfortunately, while ZETDC has the monopoly and obligation to connect a customer upon such an application being made, ZETDC did not have the financial capacity to implement the request urgently within the timelines indicated by the client,” he said.
“ZETDC and Dinson therefore agreed that they would enter into a joint venture partnership whereby Dinson would borrow money and lend it to ZETDC for the construction of the power line and substation, and ZETDC would then repay the loan over a period of 5 years through a deduction from Dinson’s monthly electricity bills.
“The proposal and application was submitted to the Zimbabwe Investment and Development Agency for Cabinet approval which was obtained on May 10.”
Subsequent to that, the parties entered into a public-private partnership agreement which was signed on May 30 before appointing a contractor to develop the project on a plant design and build basis.
This includes construction of about 100km of a 330kV single circuit overhead transmission line from Sherwood in Kwekwe to the proposed Dinson 330kV to 33kV substation in Manhize and re-routing of the existing 330kV lines into the new Dinson substation.
Outlining some of the benefits, Eng Manyewe said if implemented, the project will make it possible for Dinson to have a reliable and regular supply of power from ZETDC to execute their mining and processing activities on this flagship project on time.
He said the investment by Dinson will contribute significantly to the country’s achievement of a $12 billion mining target by 2023 in line with the National Development Strategy 1.
“There will be import substitution. Currently the country relies on steel imports for local works. Dinson will cover all steel requirements and be able to export the excess. This will relieve RBZ of forex requirements for steel imports. In employment creation, the power line project will create direct employment for over 1 000 skilled, semi-skilled and unskilled workers during the construction phase, with at least 80 percent of general labour coming from the local communities,” he said.
“There will be grid reinforcement for enhanced local power flows and regional power trading. The powerline project will also capacitate Zimbabwe to substantially contribute to the regional Southern African Power Pool, a significant contributor to the country’s revenue, as it is already strategically located in the region to facilitate power trade across Southern Africa.”
Eng Manyewe said the project will increase capacity to connect suppressed loads such as new residential stands and the electrification of institutions such as schools and clinics in surrounding areas.
“The project also benefits water pumping, water treatment plants and booster stations. One of the benefits cited by communities during public consultations is the need for the project to reduce poverty. There is acute lack of livelihood diversification in the area since most people are unemployed and their household incomes are based on communal agricultural activities,” he said.
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