Zambia Says $5 Billion Hydropower Plant Overpriced, Seeks New Tender

Taonga Mitimingi and Ray Ndlovu
·2 min read
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(Bloomberg) -- Zambia said a plan to build a 2,400-megawatt power plant on the Zambezi River is over-priced and it will exit a construction contract awarded to General Electric Co. and Power Construction Corp. of China in 2019.

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Proper procurement methods weren’t followed when the deal was struck, Peter Kapala, Zambia’s energy minister, said in comments broadcast late Tuesday on the state-owned Zambia National Broadcasting Corp. The Zambezi River Authority, a state agency overseeing the construction of the dam, estimated last year that the project would cost $5 billion.

“We are disengaging from that contract and we hope to re-advertise it and revisit everything that was agreed to before,” said Kapala. “Mainly, it was because of the cost, it was just too much.”

GE had no immediate comment. PowerChina didn’t immediately respond to a request for comment sent by email outside normal business hours.

Work on the 2,400-megawatt Batoka Gorge project was initially scheduled to begin in 2020, but it encountered several delays, including the onset of the coronavirus pandemic and difficulties in securing funding.

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“The latest information is that the hydrology of Zambezi might not favor the establishment of a 2,400 megawatt hydro-plant,” Kapala said. “We could reach that if maybe we do a hybrid of solar and hydro itself, but the indications are that we could be looking at far much less than the 2,400, it could be maybe even 1,000 megawatts.”

Zambia and Zimbabwe jointly selected General Electric and Power China to build the plant. Both southern African nations are confronting electricity shortages because their plants have been poorly maintained and drought has curbed output from existing hydropower facilities on the Zambezi.

Gloria Magombo, Zimbabwe’s secretary for energy and power development, on Wednesday said she was unaware of the Zambian minister’s comments and the ministry would respond at a later stage.

--With assistance from Li Liu and Ryan Beene.

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