During the Africa Energy Forum (AEF) being held in Cape Town this week, Vungu Solar Pvt Ltd announced the signing of a Government Project Support Agreement (GPSA), with the Government of Zimbabwe. The announcement marks an important step towards the realisation of the 30MWac Vungu Solar project, which is set to be among Zimbabwe’s first internationally project-financed solar Independent Power Producers (IPPs) selling to the Zimbabwe Electricity Transmission and Distribution Company (ZETDC). Vungu Solar is blazing a trail for others to follow by piloting the use of bankable, standardised project documentation which has been developed by the government to attract future investment into harnessing the potential of Zimbabwe’s solar resource.
Honourable Minister July Moyo, the Zimbabwe Minister of Energy and Power Development, said “The Government is ambitious about making progress in the energy sector, and so this occasion is very important. The Vungu Solar project aligns well with the Zimbabwe National Renewable Energy Policy which aims to significantly increase the contribution of renewable energy sources to the country’s overall energy mix. I congratulate all those involved.”
Founded by Energywise Equipment (Pvt) Ltd (Energywise) in 2014, Vungu Solar is being developed by the Private Infrastructure Development Group (PIDG) – through its project development solution, InfraCo – alongside Energywise and Impala Power Company Ltd (Impala). InfraCo’s work in Africa is supported by the governments of the UK, the Netherlands, and Switzerland.
Speaking on behalf of the project, Omar Jabri, PIDG Head of Business Development (Africa) for InfraCo, said, “Today’s signing here at AEF is a milestone for the Government of Zimbabwe’s ambitious programme to attract private sector and development finance into Zimbabwe’s solar sector. PIDG is proud to be working with our partners at Energywise and Impala to pioneer the use of its suite of bankable, standardised project documentation which, it is anticipated, will attract future investment into the scale-up of Zimbabwe’s renewable energy sector. Once built, Vungu Solar will add 30MWac of clean, solar power to Zimbabwe’s national grid, reducing emissions and improving the reliability of power for customers which will, in turn, promote wider economic development.”
CEO of Energywise. Eng. Culven Chipfumbu said of today’s signing, “The signing of the GPSA is a milestone achievement for Vungu Solar as the pilot IPP for the GPSA programme, and this now gives Vungu Solar confidence to negotiate construction funding for the project, backed up by this very important government instrument.”
Speaking from Harare, British Ambassador to Zimbabwe, Pete Vowles said: “We are very pleased that this pioneering investment in Zimbabwe’s clean energy has been finalised, building on hard work from all parties to reach agreement, and an excellent example of cooperation under our bilateral MoU on Renewable Energy. It is also a significant milestone in our UK-Zimbabwe partnership, which is focused on delivering mutual benefits through economic growth and will help us attract further investment into this critical sector that can power the economy, create jobs, and deliver a sustainable future.”
The project was selected by the Government of Zimbabwe as its preferred bidder in a national pilot designed to create an enabling environment for future investment into the country’s solar sector. With support from the African Legal Support Facility (ALSF), and in negotiation with the Vungu Solar team, a cross-government group, led by the Ministry of Energy and Power Development, have prepared standardised, bankable PPA and a 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 in Cape Town today. 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.
The project will contribute towards delivery of SDG 7 – Access to affordable clean energy – and SDG 13 on climate action.
Vungu Solar will contribute to achievement of the Government of Zimbabwe’s ambitious plans to achieve 100% household electricity access by 2030, as well as access to clean cooking, and the diversification of the country’s energy mix to include more renewable energy.
It is anticipated that, by piloting the use of bankable, standardised documentation, Vungu Solar will enable the Government of Zimbabwe to attract significant future development finance and private sector investment to grow the country’s renewable energy sector. The project expects to reach financial close and commence construction in 2026.
Notes for Editor:
- As lead developer on the project, PIDG brings its experience of structuring bankable IPPs in frontier markets to the project, as well as its expertise in developing projects to international health, safety, environmental, social, and business integrity standards, and of raising project finance.
- 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.
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
The MOEPD has led the coordination of a cross-governmental group comprised of:
- 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/
- 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
- 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
- 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
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 south-east 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; its project development solution – InfraCo – which invests in early-stage project development and project and corporate equity. PIDG credit solutions include EAAIF (the Emerging Africa and Asia Infrastructure Fund), one of the first and more successful blended debt funds in low-income markets; GuarantCo, its guarantee arm that provides credit enhancement and local currency solutions to de-risk projects; and a growing portfolio of local credit enhancement facilities, which unlocks domestic institutional capital for infrastructure financing. Since 2002, PIDG has supported 233 infrastructure projects to financial close, which provided an estimated 228 million people with access to new or improved infrastructure. PIDG is funded by the governments of the United Kingdom, the Netherlands, Switzerland, Australia, Sweden, Global Affairs Canada, Germany, and the IFC. 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/
For more information contact:
Lorna McNae
Senior Communications Manager – InfraCo
