HARARE (Reuters) - Three Chinese firms led by Shanghai Electric Group are considering setting up a coal mine and a 1,200 MW thermal power station in western Zimbabwe, company officials said.
Industries and households in the southern African country have endured electricity cuts for years because the state power utility produces only 1,100 MW of power, half the national demand.
Under the deal, Shanghai Electric would partner Shenergy Co Ltd and Nan Jiang Group to form Southern Africa Shanghai Energiser Company (SASEC), which would mine coal and build the power plant in Zimbabwe’s western coal mining belt.
The companies signed a memorandum of understanding on the project on Wednesday night, joining a growing list of Chinese enterprises seeking business opportunities in a country desperate for foreign investment.
The consortium and Zimbabwe’s government are in talks over a mining and power generation licence, Jonathan Kadzura, chairman of the southern Africa unit of Nan Jiang, told Reuters. The first 300 MW would take three years to produce.
“They want to build the power station in three stages up to 1,200 MW and they are going to finance it as an independent power producer,” Kadzura said.
SASEC would sell its electricity to the state-owned Zimbabwe Power Company and also export to the region.
Zimbabwe’s long-serving President Robert Mugabe has increasingly sought aid from China in the absence of funding from the West, which accuses him of human rights abuses and election fraud. The 90-year-old leader denies the charges.
Earlier this month, China’s Sino Hydro started work to add 300 MW to Kariba hydro power plant.
Sino Hydro was awarded a $1.3 billion contract in June to add 600MW at the Hwange coal-fired power station while China Sunlight Energy is working on energy projects worth $2 billion.
“We can also offer finance and investments in the power industry. We hope we can help you build power stations and to mitigate the shortage of power,” Shanghai Electric’s president Zheng Jianhua said at Wednesday’s signing ceremony.