ZESA HOLDINGS (PVT) LIMITED

PRESENTATION ON POWER GENERATION OPTIONS

BY O. NYATANGA GENERAL MANAGER CORPORATE AFFAIRS

PRESENTATION OVERVIEW 1. Power Sector Reforms In Zimbabwe - Legislation

- New ESI Structure

2. Electricity Generation Information 3. Generation Expansion Projects

Justification The Projects
Western Power Plant - Gokwe North

THE NEW ESI STRUCTURE

MINISTRY OF ENERGY & POWER DEVELOPMENT
Z E R C

ZESA HOLDINGS (PVT) LTD

RURAL ELECTRIFICATION FUND

IPPs

ZPC

ZETCO

ZEDC

ZESA ENT. POWERTEL

THE NEW ESI STRUCTURE

MINISTER OF ENERGY AND POWER DEVELOPMENT

ZESA HOLDINGS (Pvt) Ltd

National Generation Company

National Transmission Company

National Distribution Company

ZESA Enterprises

PowerTel

ELECTRICITY SECTOR REFORMS

Reform Objectives Availability Accessibility Affordability

REGIONAL INVESTMENT OPPORTUNITIES

ELECTRICITY GENERATION INFORMATION

ELECTRICITY GENERATION INFORMATION

CURRENT POWER STATIONS POWER STATION Hwange Power Station Kariba Power Station 3 x Small Thermals TOTALS TYPE OF STATION Thermal INSTALLED CAPACITY 920 MW DEPENDABLE CAPACITY 780 MW

Hydro

750 MW

750 MW

Thermal

270 MW 1 940 MW

170 MW 1 700 MW

LOCATION OF POWER STATIONS

Existing Power Sources in Zimbabwe

ZAMBIA KARIBA SOUTH 750 MW
Mutorashanga Alaska Norton Dema
Empress

MOZAMBIQUE

HARARE

Bindura

HWANGE 920 MW

Sherwood Haven Chertsey

MUNYATI
Orange Grove

BULAWAYO
Insukamini Marvel Tokwe

Plumtree

Triangle

Beitbridge

BOTSWANA RSA

GENERATION EXPANSION PROJECTS : THE JUSTIFICATION

GENERATION EXPANSION PROJECTS

JUSTIFICATION

Current Supply-Demand Situation

Internal Dependable Capacity 1700 MW Imports through bilateral agreements 650 MW Available Maximum Capacity 2350 MW Maximum Demand 2100 MW

Future Supply-Demand Situation

Zimbabwe will require an additional 1750MW by 2007 made up of the following: Import Displacement 650 MW Expanded Rural Electrification Program 450 MW GDP Growth/New Investments 400MW Spinning Reserve 250 MW

JUSTIFICATION
Demand and Energy Forecast for Zimbabwe (2005 2011)
16000 14000 12000 10000 3100 2600 2100 1600 1100 600 100 -400 2002 2003 2004 2005 2006 Year 2007 2008 2009 2010 2011

Gwh

8000 6000 4000 2000 0

Current Generation Capacity

Historical Energy Projected Energy

Historical Demand Projected Demand

MW

ZIMBABWES PLANNED SHORT TERM GENERATION PROJECTS

ZAMBIA KARIBA SOUTH EXTENSION
Kariba

MOZAMBIQUE

Mutorashanga Alaska Harare P/S Norton Bindura Harare Warren Dema

HWANGE EXPANSION

3I5 km

Empress

LUPANE CBM
183 km 182 km

Sherwood Haven Chertsey

Munyati P/S Orange Grove

Byo P/S Marvel Insukamini

Plumtree

Tokwe

40km

Triangle

Beitbridge

BOTSWANA RSA

ZIMBABWE GRID WITH PROPOSED PROJECTS

ZAMBIA KARIBA SOUTH EXTN
Kariba

MOZAMBIQUE

161km Up to the Border

Mutorashanga Livingston-ZAMBIA 110 km

2 X 70km

GOKWE NTH BATOKA

Alaska
200 km

Harare P/S Norton

Bindura Harare Warren Dema

Gairezi Mini Hydro

255 km 3I5 km
Empress

HWANGE WESTERN POWER

385 km

Ngezi I50 km
Osborne Mini Hydro

LUPANE
182 km

Sherwood Haven

Munyati P/S Orange Grove Chertsey

183 km 310km

CONDO

Byo P/S Marvel Insukamini

60 km

Mutirikwi Mini Hydro

Rusitu Mini Hydro

Tokwe
Siya Mini Hydro

Plumtree

40km

Manyuchi Mini Hydro

161km Up to the Border

280 km

Triangle

Beitbridge

BOTSWANA RSA

GENERATION EXPANSION PROJECTS JUSTIFICATION

Energy Security Requirement

- Power Deficit in SADC Region (SAPP) in 2007

- Increase in Demand Against Limited Growth in Supply - New Imports Contracts Required Annually in Constrained Supply Situation (2005-2007)

Gabon

Congo Dem Rep of the Congo Kinshasa Rwanda Burundi

Kenya Nairobi

Brazzaville
H

Tanzania
H H

Luanda
H

Angola

Malawi Zambia

SAPP GRID

Lilongwe
H H H H H T

Mozambique

Lusaka
H H H T H H H

Harare

Namibia Botswana Windhoek

H T ET

Zimbabwe

Gaborone Pretoria Johannesburg South Africa

T H

ETET ET ET ET ETET ET ET ET ET

H T

Maputo Mbabane Swaziland

H P T ET

Lesotho
H

Hydro station Pumped storage scheme Thermal Station Eskom thermal station

Cape Town

N P

GENERATION EXPANSION PROJECTS JUSTIFICATION

16000 14000 12000 10000 8000 6000 4000 2000 0
2002 2003 2004 2005 2006 2007
Supply gap beyond 2007

Demand Local Gen Imports

Annual Energy Supply and Demand in GWh

GENERATION EXPANSION PROJECTS JUSTIFICATION To meet growing requirements of the economy (EREP, EEUID, New Mines, ) Replace ageing power plants Alternative to hydro generators prone to drought (Hydrological Risk) in the SAPP (SADC) Region

GENERATION EXPANSION PROJECTS JUSTIFICATION The least-cost generation option for commissioning in three years Largest IPP in SADC (SAPP) when completed Premium power exports to SAPP post 2007 Large coal deposits (30 billion tonnes reserves)

COALFIELDS IN ZIMBABWE

KNOWN COAL RESOURCES

COAL DEPOSIT Mid-Zambezi Hwange Chaba W estern area Entuba Lubimbi Lusulu Sengwa Lubu-Sebungu Marowa Sinamatella Sub Total Sabi-Limpopo Sessami- Kaonga Bubi Sabi Tuli Sub Total GRAND TOTAL INSITU (million tonnes) 418 103 952 532 21 083 1200 400 83 14 96 24 881 1000 60 569 115 1 744 26 625 No. of Drill Holes 3 900 150 26 34 124 12 50 5 3 ? 4 304 12 13 12 5 42 4 346

PRODUCTION HISTORY
COAL PRODUCTION TRENDS
7000000 6000000 5000000 4000000 3000000 2000000 1000000 0
1980 1981 1982 1983 1984 1985 1986 1987 1988 1989 1990 1991 1992 1993 1994 1995 1996 1997 1998 1999 2000 2001 2002 2003 2004

HPS

HCC

TOTAL COAL

WESTERN POWER PROJECT

WESTERN POWER PROJECT

WESTERN POWER PROJECT

Project Salient Features vSteam Coal 1billion tonnes steam coal reserves
900 million tonnes from Western 100 million tonnes from Sinamatela 11m thickness for full seam development for Western 4.5m thickness for full development for Sinamatela 15-30 % ash content Dragline investment required 0. 8% sulphur content

WESTERN POWER PROJECT

Project Salient Features vCoking Coal 140 million tonnes coking coal reserves
128 million tonnes requires underground mining up to 350m 12 million tonnes requires open cast mining

3.9m thickness for underground mining 2.4m thickness for open cast mining Ash Content below 13%

WESTERN POWER PROJECT

Project Salient Features 4 x 300 MW generators (1 200MW) OR 4 x 600 MW generators Cost of project : US$1.4 billion for 1 200MW or US$2.4 billion for 2 400 MW Dependable Capacity : 1 080 MW on 1 400 MW station or 1920 MW on 2 400 MW station 2 x 420kV line connections to Insukamini

WESTERN POWER PROJECT

Project Salient Features Levelised Electricity Tariff : +/- USc4.5/kWh IRR : 18% Coal Consumption : 5.0 million tonnes/year An export market Power Station

WESTERN POWER PROJECT

THE PROJECT FINANCING PLAN : 1 200 MW
SOURCE OF FUNDING Foreign (EPC Contract) Local (Own Funding) Total US$ MILLION 980 420 1 400 % OF TOTAL 70.0 30.0 100.0

WESTERN POWER PROJECT

THE PROJECT FINANCING PLAN : 2 400 MW
SOURCE OF FUNDING Foreign (EPC Contract) Local (Own Funding) Total US$ MILLION 1 680 720 2 400 % OF TOTAL 70.0 30.0 100.0

THANK YOU

GOKWE NORTH POWER PROJECT

Gokwe North Project

LOCATION
ZAMBIA MOZAMBIQUE

Kariba Gokwe North

Mutorashanga Harare Norton Chakari Bindura

Dema

HWANGE

Munyati P/S

Sherwood Haven Chertsey

Orange Grove

Insukamini Marvel Bulawayo

Tokwe

BOTSWANA
KEY EXISTING POWER STATION EXISTING PRIMARY TRANSMISSION SYSTEM Triangle

RSA

SITE LOCATION

GOKWE NORTH POWER PROJECT

Project Salient Features 1,3 billion tonnes coal reserves 4 735 ha coal mining area 22m thickness for full seam development

GOKWE NORTH POWER PROJECT

Project Salient Features 21.6% ash content 0.38% sulphur content No dragline investment required Conveyor belt used to deliver coal to power station

GOKWE NORTH POWER PROJECT

Project Salient Features 4 x 350 MW generators (1 400MW) Cost of project : US$1.68 billion Dependable Capacity : 1 283 MW 2 x 420kV line connections to Alaska and Chakari

GOKWE NORTH POWER PROJECT

Project Salient Features Levelised Electricity Tariff - USc4.52-5.22/kWh IRR : 13.79% -19.76% Coal Consumption : 5.4 million tonnes/year Power station located 2km from mine

GOKWE NORTH POWER PROJECT

Project Salient Features Power station to occupy 40ha Water pumped from Lake Kariba (85km) Water used for wet cooling system, industrial, mine and township/domestic purposes

Possible Cooling System Air Cooling

Recommended Cooling System Indirect Cooling

85 km of water pipeline from Lake Kariba

POSSIBLE AGREEMENT WITH GOVERNMENT

Fuel Supplier

Financier Loans payment LOAN

Re-

Fuel
FSA
Project Company Service Money s $ Plant Supplier O & M Contractor

Money $

Power Purchaser

Revenue $

Power GWh

(IPP)

PPA

Capital

Plant

PPC

O&M

GOKWE NORTH POWER PROJECT

THE PROJECT FINANCING PLAN
SOURCE OF FUNDING Foreign (EPC Contract) Local (Own Funding) Total US$ MILLION 1 030 650 1 680 % OF TOTAL 61.3 38.7 100.0

THANK YOU

GOVERNMENT INCENTIVES
1. Independent Energy/Price Regulation 2. Tax Holidays for new investment 3. Dividend and Profit Repatriation 4. Other investment incentives