HomeInfrastructureZimbabwe indigenization: Infrastructure also at risk

Zimbabwe indigenization: Infrastructure also at risk

Zimbabwe – Zimbabwe indigenization continues to see political risk rising as the economy struggles on and the battle of succession is increasingly coming to the forefront.

The mining sector, which is a key growth driver for the country’s infrastructure, has in the past been hit hard by indigenization drives. With President Robert Mugabe expected to execute these as part of his regime, there is much concern the mining industry will not give its infrastructure counterpart the support it has previously been able to give.

This, coupled with poor legal and regulatory frameworks, has seen only the most risk-tolerant enter the country.

 This information is according to BMI Research, a Fitch Group company, which provides independent analysis and forecasts on countries, industries and financial markets

Investments and foreign companies remain deterred from entering the country through existing legislations, including the indigenisation laws.

The country’s construction industry remains poor in relation to its regional counterparts, with average growth between 2015 and 2024 expected to be a mediocre 2.6%. BMI Research expects growth to continue to underperform over the near team, with risks to the downside for the 2% construction growth forecast for 2015, following a meagre 1% in 2014.

Key Trends And Developments

The Zimbabwe Power Company (ZPC) seeks to produce more than 9 000 GWh of power in 2015. The projected output is 9 799.06 GWh, up from the target of 9 766.39 GWh in 2014.

Zimbabwe’s government has started implementing projects, including the expansion of the Kariba and Hwange power plants to meet demand. Additional units to be built at Kariba and Hwange will add another 900 MW to the grid.

ZPC is expected to complete the construction of a 120 MW emergency/peaking power plant in Mutare, Zimbabwe, by 2018. The project is estimated to cost about USD$1.2 billion. The gas and diesel power plant is one of the planned priority projects under the Zimbabwe Agenda for Sustainable Socio-Economic Transformation 2014/18.

The peaking power plant will have a dual powering mechanism, which will allow it to run on either diesel or gas. ZPC will import the fuel for the plant from Mozambique. ZPC has already issued a tender inviting firms to submit bids to carry out construction of the power station.

A Zimbabwean proposal to build a second petroleum pipeline carrying nearly 500 million litres of fuel a month from Savanna, north of Beira in Mozambique, to Zimbabwe has been rejected by Mozambique, according to government officials.

The proposed pipeline would have run parallel to the existing Feruka petroleum pipeline, which supplies 6.5 million litres of fuel per day from the Beira fuel depot to Harare, Zimbabwe. ‘Zimbabwe may not take unilateral action on this project,’ says Partson Mbiriri, a permanent secretary in the Ministry of Energy and Power Development.

Road Motor Services, a subsidiary of National Railways of Zimbabwe, has initiated work in order to prepare for construction at the Walvis Bay dry port in Namibia. The government of Namibia provided 19 000sq metres of land to the Zimbabwean government to build its own dry port to boost trade.

The project, led by Road Motor Services, has been hampered by financial issues and was initially scheduled to wrap up by May 2013. The first phase entails building a drive-in weighbridge, storage shades, palisade fencing. along with installation of electric catwalks. In the second phase, administration blocks will be established.

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