It is reported that the government has found an investor for the Lupane Methane Gas Project. They say that production is scheduled to commence this year in July. Once underway the project is projected to produce 15 MW this year and reach as high as 1000 MW by end of 2027. Mines and Mining Development Minister, Mr Chitando, told parliament last week of this development. This gas project has been a long time coming since several years have ensued without any activity. This was due to the lack of solid investors expressing interest in the project.
Minister Chitando’s Remarks To Parliament
“There is a prospective investor for the Cewale Methane Gas Project. The external investor has secured project funding for a 15 MW Pilot Power Production Project from Coal Bed Methane Gas. Production is scheduled to start by July 2020. Phase 2 will scale up the project to 200 MW by 2023 and Phase 3 will scale up the project to 1000 MW by December 2027.”
A Brief Background To The Project
Many years ago it was discovered that there are natural gas reserves in Lupane. It is estimated that there are 40 trillion cubic feet of gas in that area spanning also to Lubimbi. This could easily be the biggest natural gas reserves in Southern Africa. However, nothing has materialized in as far as commercially using those reserves is concerned. Exploration, feasibility studies and even pilot projects were done to ascertain whether or not the reserves could be of commercial value. It was ascertained that those natural gas reserves can be used for local industries and domestic households. It is also worth noting that the same coal bed methane gas can produce hydrogen (input into the production of ammonia for fertilizer production).
The Continued Tale Of Untapped Power Projects
Lupane is found in the Matabeleland North area. I find it interesting that there are several projects that are yet to take off in that area and also Matabeleland South. The most famous one is the 100 MW Gwanda Solar project that did not take off – the one that involved Mr Chivhayo. You will also find it interesting that there are 6 licensed coal projects with a combined capacity of 4560 MW located in Binga and Gwayi. At least it is refreshing to know that these 6 are already in motion.
There is another solar power project that combines Gwanda, Insukamini and Munyati. It has a combined power capacity that can be generated of 300 MW. This is a Zimbabwe Power Company (ZPC) solar project. The cost of that project is US$570 million and lack of funding has been cited as the biggest impediment. I am pointing out all this to show how as a nation we are sitting on so much power generation potential. Yet ironically load shedding still rages on countrywide.
Why Financing Or Finding Investors Is Problematic
If you closely look at projects where all the preliminary work was done but with no commencement of operations there is a common issue. The issue pertains to funding constraints as you have seen in this Lupane project and the ZPC solar project I mentioned earlier. One of the biggest setbacks is the economic performance which scares away investors. Most investors are very hesitant to invest locally because of the mercurial state of the economy. The other challenge stems from the corruption that is rife locally. Often time investors are asked to pay bribes in order to operate locally. This ends up causing most investors to pull out before they even commence any business operations.
The other issue is that of an operating environment that is riddled with uncertainty. The issuance of statutory instruments has become a common occurrence in Zimbabwe. One day you wake to hear the US dollar is no longer at par with the bond. The next day you wake to hear that legacy debts can now be paid on a one to one parity between the US dollar and the bond. Operating in an environment like that is something that an investor would not want because investors want to be sure their financial interests are secure.
One thing is for sure though; Zimbabwe is endowed with more than enough of what it will ever need. This spans from natural to human resources – there is plenty. To think that the country still grapples with power shortages yet being laden with numerous power sources is quite ironic.
