HEAVILY indebted State power utility Zesa Holdings has incurred a fresh US$43,5 million debt under a public private partnerships (PPP) with one of its major customers, Dinson Iron and Steel Company (Disco).
Disco is a sister company to Afrochine, and is currently establishing a mega steel production and value-addition project in Manhize, Mvuma where its first steel production is expected in September 2023.
Zesa’s indebtedness brings into question the issue of viability at a time when its going concern status has been questioned due to its ballooning debt.
Most of its operational costs are largely due to antiquated equipment. Latest reports state that Zesa owes creditors more than $15 billion.
During a signing ceremony for the facility which is under the Zimbabwe Electricity Transmission and Distribution Company (ZETDC), Zesa’s energy distributing arm, ZETDC managing director Howard Choga said a transmission line would be set up from Kwekwe, Sherwood substation to Manhize in Chivu where Disco’s steel project is based.
“The project was approved by Cabinet a fortnight ago in three years, Disco will require 500MW,” he said.
“I would like to assure the nation that we are up to the task,” Choga added.
Disco representative Wilfred Motsi said the powerline got the greenlight from environmental authorities after an impact assessment on the project was carried out. He also said the Lands ministry identified land to resettle farmers who may be affected by the powerline.
All the equipment for the project is already in place, Motsi said.
“It’s not just a key enabler for our project but a model that will benefit the Zimbabwean economy,” Motsi added.
Disco will require 40% of the power in the initial stages.
When fully operational, Disco’s project requires 500MW and is set to be the largest power-consuming project in the country which is generating just about 1 700MW.
Disco’s steel plant has capacity to produce more than 1,2 million tonnes of steel annually. Last year, Afrochine said the steel plant would sit on 2 000 hectares. This will comprise a 1,5km long and 600 metre wide processing plant and mines.
Altogether the operation will turn over at least US$1,5 billion per annum.
Afrochine, Zimbabwe’s largest chrome smelting operation is a subsidiary of Chinese conglomerate Tsingshan Holdings, which accounts for 25% of global steel production.