Harare, Zimbabwe: At a reception held at the residence of Pete Vowles, British Ambassador to Zimbabwe, Vungu Solar Pvt Ltd signed a 25-year Power Purchase Agreement (PPA) with the Zimbabwe Electricity Transmission and Distribution Company (ZETDC).
As the pilot for the Government of Zimbabwe’s Government Project Support Agreement (GPSA) solar IPP programme, the 30MWac solar project is set to be among Zimbabwe’s first internationally project-financed solar independent power producers (IPPs) selling to ZETDC. The Private Infrastructure Development Group (PIDG) is leading Vungu Solar’s development – through its project development solution, InfraCo – alongside project founder, Energywise Equipment (Pvt) Ltd (Energywise), and Impala Power Company Ltd (Impala).
Speaking at the signing event, Mr Vowles said, “The agreement being announced today is an important step towards finalising the Vungu Solar project which will provide enough power for 76,000 homes. By agreeing a pricing structure, this project is also helping to set a template for more investors to enter Zimbabwe’s renewable energy market, creating jobs and building a greener future for all. It is a strong reflection of our countries’ shared commitment to sustainable growth.”
Engineer Raphael Katsande, Acting Managing Director of ZETDC said, “ZETDC welcomes this PPA as heralding an important contribution to meeting the energy needs of Zimbabwean consumers and industries. We look forward to seeing implementation of the project as soon as possible.”
Engineer Benson Munyaradzi, Chief Director of the Ministry of Energy and Power Development (MOEPD) said, “The government of Zimbabwe selected Vungu as its preferred bidder through a pilot initiative by which it hoped to negotiate a set of bankable, standardised documents – including the PPA signed here today – which can be used by other solar projects in the future, attracting development and private sector investment to accelerate the country’s energy transition, and achieve its ambitious electrification targets. MOEPD is proud to play a role in this initiative.”
Speaking on behalf of Vungu, Energywise CEO, Culven Chipfumbu, said, “The signing of the PPA is a key milestone for Vungu Solar and we would like to acknowledge the commitment of ZETDC, ZERA, and our partners, PIDG and Impala, to the project. We are committed to working to secure financing for the project with a sense of urgency so that we can start construction as soon as possible.”
Michiel Oosterhaven, PIDG Regional Business Development Lead for InfraCo, said, “The signing marks the culmination of considerable work by all parties to progress this pioneering approach to delivering clean energy for Zimbabwe’s homes and businesses. By negotiating standardised, bankable documentation, Vungu Solar also sets the stage for new investors to enter Zimbabwe’s renewable energy sector at scale.”
With support from the African Legal Support Facility (ALSF), negotiation of documentation was undertaken with a cross-government group led by the Ministry of Energy and Power Development. The PPA goes hand-in-hand with the Government Project Support Agreement (GPSA) — a policy tool designed to de-risk IPP investments through guarantees, cost-reflective tariffs, and currency convertibility provisions — the signing of which was announced at last year’s African Energy Forum in Cape Town.
Olivier POGNON, the Chief Executive Officer and Director of the ALSF, said, “The signing of this PPA represents a critical milestone in Zimbabwe’s efforts to attract external capital into its power sector. This project forms part of a solar power procurement pilot that is designed to develop a standardised, bankable procurement toolkit. This framework will accelerate the development of new generation capacity by enhancing predictability, improving investor confidence, and ensuring commercially viable terms that are fiscally sustainable for the Government.”
Notes for Editor:
- As lead developer on the project, PIDG brings its experience of co-developing bankable IPPs in frontier markets to the project, as well as its expertise in commercial structuring, raising project finance, and developing projects to international health, safety, environmental, social, and business integrity standards.
- The ALSF assistance to the Government included legal and financial support from Covington & Burling LLP and Manokore Attorneys on the legal aspects, and EY Transactional Advisory Services on the financial aspects.
- Zimbabwe has an electrification rate of 62%, with the majority of grid-connected customers being concentrated in urban areas.
- Demand for electricity in Zimbabwe outstrips supply with the shortfall met by imports and customers experiencing frequent load shedding.
- Vungu is expected to supply enough electricity to the grid to power 76,000 households.
- Despite recent gains in solar capacity, Zimbabwe’s installed power generation is largely reliant upon hydro and coal. Droughts have impacted hydro generation across Zimbabwe in recent years.
- InfraCo’s work in Africa is supported by the governments of the United Kingdom, the Netherlands and Switzerland.
Zimbabwe Electricity Transmission and Distribution Company (ZETDC) – a subsidiary of ZESA Holdings. ZETDC is responsible for the transmission of electricity from the power stations, the distribution of electricity as well as its retailing to end users. https://www.zetdc.co.zw/
Zimbabwe Energy Regulatory Authority (ZERA) is a body corporate established in terms of the Energy Regulatory Authority Act [Chapter 13:23] of 2011. It is mandated to regulate the entire energy sector in Zimbabwe in a fair, transparent, efficient, and cost-effective manner for the benefit of the consumers and energy suppliers. https://zera.co.zw
The Private Infrastructure Development Group (PIDG) is an innovative infrastructure project developer and investor which mobilises private investment in sustainable and inclusive infrastructure in sub-Saharan Africa and south and southeast Asia. PIDG investments promote socio-economic development within a just transition to net zero emissions, combat poverty and contribute to the Sustainable Development Goals (SDGs). PIDG delivers its ambition in line with its values of pioneering, partnership, safety, inclusivity, and urgency. PIDG offers technical assistance for upstream, early-stage activities and concessional capital; invests in early-stage project development and project and corporate equity through its project development solution, InfraCo; its debt solution EAAIF (the Emerging Africa & Asia Infrastructure Fund) is one of the first and more successful blended debt funds in low-income markets; and its guarantees solution, GuarantCo, provides credit enhancement and local currency solutions to de-risk projects. PIDG also supports a growing portfolio of local credit enhancement facilities, which unlock domestic institutional capital for infrastructure financing. Since 2002, PIDG has supported 258 infrastructure projects to financial close, which provided an estimated 232 million people with access to new or improved infrastructure. PIDG is funded by the governments of the United Kingdom, the Netherlands, Switzerland, Australia and Sweden, and Global Affairs Canada. www.pidg.org
Energywise Equipment Ltd (Energywise) is a developer of on-grid and off-grid solar power plants that enable its customers to generate clean, affordable energy. Energywise is committed to developing reliable, adaptable, and affordable solutions that cut energy costs and is developing a number of projects in the Midlands and Matebeleland provinces of Zimbabwe. www.energywise.co.zw
Impala Power Company Ltd (Impala): Impala Power Company is a Xago Africa project vehicle. Xago Africa is a developer of renewable energy projects and agribusiness ventures intended to support sustainable socio-economic development in Africa by expanding the availability of electric power for households and industry, and by promoting agribusiness ventures that incorporate processing and manufacturing to stimulate value addition and job creation.
African Legal Support Facility (ALSF) is an international organisation hosted by the African Development Bank (AfDB) in Abidjan, Côte d’Ivoire. It was established in 2008 by the AfDB Group, at the request of African countries, and became operational in 2010. The ALSF is dedicated to providing legal advice and technical assistance to African countries in the structuring and negotiation of complex commercial transactions, creditor litigation, and other related sovereign transactions. The ALSF also proposes and develops innovative tools for capacity building and knowledge management. The goal of the ALSF is to remove asymmetric technical capacities and level the field of legal expertise during (i) the negotiations of complex commercial transactions between African Governments and private sector participants and (ii) litigation. The ALSF’s mandate covers the energy, extractive & natural resources, infrastructure and PPP, and sovereign finance sectors. https://www.alsf.int/
Ministry of Energy and Power Development (MOEPD) ensures the provision of adequate and sustainable energy through formulating and implementing effective Policies and Regulatory Frameworks. https://www.zim.gov.zw/index.php/en/my-government/government-ministries/energy-and-power-development
Ministry of Finance, Economic Development, and Investment Promotion formulates, coordinates, and monitors the implementation of national development plans, macro-economic policies, effectively Mobilise, Allocate, Manage and Account for public resources. https://www.zim.gov.zw/index.php/en/my-government/government-ministries/finance-and-economic-development
Reserve Bank of Zimbabwe aims to ensure price and financial stability through prudent, innovative, evidence-based monetary policies that preserve the value of the local currency and promote sustainable and inclusive growth for the prosperity and resilience of Zimbabwe. https://rbz.co.zw
