Home » Health » Zinwa Seeks U.S $30 Million for Tokwe-Murkosi Dam

THE Zimbabwe National Water Authority (ZINWA) is seeking US$30 million to complete construction of the Tokwe-Murkosi Dam in the Lowveld.

ZINWA, whose mandate includes the development of water reservoirs and provision of bulk raw water, has already engaged the Infrastructure Development Bank of Zimbabwe (IDBZ) to act as financial aisors and arrangers for the project.

IDBZ is expected to raise the required amount through debt financing.

The Financial Gazette understands the debt facility would be repaid over 12 years, with the interest rate not exceeding seven percent.

The construction of the Tokwe-Murkosi Dam is estimated to be 88 percent complete, with the parapet wall, placement of filter material on the parapet wall base and construction of the access bridge from the embankment to the gate house still outstanding.

The economic value of the dam would be derived from its use for irrigation to expand agricultural production within the region.

With a yield of 364 000 millilitres per year, the dam would have sufficient water to irrigate up to 25 000 hectares of land.

Economic value would also be realised from a proposed mini hydro project. The dam wall was designed with the potential of generating about 15 megawatts of electricity.

Hospitality and recreational facilities, a game park and fisheries are expected to be developed once the dam construction is complete.

These developments are likely to result in the upgrade of the Buffalo Range Airport and improvement of the livelihoods of the local communities through the creation of jobs and markets for agricultural produce.

The main project contractor — Salini-Impreglio JV — suspended works in January this year citing huge outstanding amounts of money it is being owed.

IDBZ’s spokesperson, Priscillah Mapuranga, confirmed the development, saying the bank had begun official talks with local and international financiers.

“In view of complementing government efforts, the bank is currently engaging various local and international financiers to raise US$30 million urgently required for completion of Tokwe-Murkosi Dam,” said Mapuranga.

“An investment documentinformation memorandum highlighting the investment case for the completion of funding and the dam project has been prepared by the bank as basis for canvassing for support from financiers.

“This document, illustrating bankability for the project, is being selectively distributed to potential investors for their evaluation and consideration given that the capital raise will be executed on a private placement basis.

“The funding for completion of Tokwe-Murkosi Dam is urgent and the bank hopes to conclude the capital raise in the short term.”

The cash-strapped government has been funding the construction of the dam from its coffers. In the past 14 years, government has spent US$262 million through allocations from the National Budget on dam construction.

The debt facility to finance the outstanding works would be backed by government guarantee.

The Financial Gazette understands that ZINWA would repay the debt through revenue proceeds from the supply of water to beneficiaries of irrigation water, who include Tongaat Hullet Zimbabwe’s subsidiaries Triangle Sugar Corporation and Hippo Valley Estates. Greenfield Zimbabwe’s subsidiaries such as Macdom Investments and Ratings Investments will also pay for the water.

Tongaat Hullet and Greenfied Zimbabwe are currently supplied irrigation water from ZINWA’s existing dams — Muzhwi and Osborne dams.

This means revenues from the off take agreements with existing beneficiaries of irrigation water would be ring-fenced, with proceeds from the customers being paid into a sinking fund to be set up and administered by IDBZ.

Under the ring-fencing arrangement, ZINWA would cede and escrow receivables from its large irrigation customers in the Lowveld areas to provide cover on interest and capital payments throughout the period of the debt facility.

This newspaper can reveal that over the past five years, revenue from the off takers has averaged US$5 million.

Construction of the dam commenced in April 1998 with all families and their livestock in the dam basin moved to Chisase, Chingwizi and Masangula resettlement areas.

However, work on the dam was suspended in 1999 due to a shortage of funds.

Following this period, the project went through a stop-start process from 2001 to 2005. Construction commenced in May 2011, with plans to complete the project in November 2013.

Impoundment was to start in November 2013 with the first supply of irrigation water targeted for 2014.

The contractor was granted an extension to complete the project by August 2014 mainly because there were additional excavations on the foundations and the planned project commencement was delayed by financial constraints.

The contractor was further granted an extension from September 2014 to June 2015.

Source : Financial Gazette