The power line will deliver power from Sherwood in Kwekwe to a new one billion US dollar steel plant in Mvuma, and “is a critical component of the project and will also bring much needed power to households, agriculture and mining activities in communities along its path,” explained Farai Mushoriwa.
Head of Mushoriwa Pasi’s mining, energy and infrastructure law division, Mushoriwa led the project team which concluded work on this transaction. “We were retained by the steel plant’s project developer to assist in the negotiation and drafting of agreements for the purpose of developing a high voltage line. We successfully closed the structural arrangements of the transaction as well as complex financing structures to enable this key piece of infrastructure to be built,” he said.
All negotiations in the energy sector in Zimbabwe involve the Zimbabwe Electricity Transmission and Distribution Company (ZETDC) and are of necessity quite technical, to ensure the grid is protected through every stage of the development. “Extensive negotiations took place regarding technical as well as financing aspects which needed government approval since the project is of national significance,” said Mushoriwa. “As opposed to negotiations in other sectors such as mining or agriculture, power generation or transmission negotiations are more intense and the government and regulators have experts who ensure that the transaction goes through smoothly.”
Beatrice Moyo, an associate partner in the firm’s mining, energy and infrastructure law department explained that in Zimbabwe, grid availability in urban areas is good (although sometimes hindered by loadshedding and other outages due to infrastructure failure or vandalism) and there is generally no need for an investor to arrange their own power source. However, where one seeks to invest in more remote areas, or if the power required exceeds the grid capacity in that area due to the size of the project – as is the case in this instance – there may be a need to create new connections or upgrade existing ones.
As the infrastructure setup will belong to ZETDC and not the investor, suitable payback arrangements had to be made. “Investors will be encouraged to know that the ZETDC is quite supportive of such developments as they help their grid, and adequate compensation arrangements can be made,” Mushoriwa commented.
He believes this development is a good sign for Zimbabwe’s economy as a whole. “The success of this project will be a positive sign that, in spite of much negative market publicity, serious investment in Zimbabwe can be consummated and ultimately protected for the benefit of both the investor and the host nation. The localisation of such manufacturers also signals a boost for steel-dependent industries, hopefully lower costs for steel in the country, and improved availability and development of skills in the industry.”
A Zimbabwean corporate law practice based in Harare, Mushoriwa Pasi provides a well-rounded legal service of international standard to its clients. The firm has been recognised by Global Law Experts as the recommended firm for litigation in Zimbabwe. For further information visit their website.
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