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Monday, 7 October 2013

Mine Watch (Maamba), 3rd Edition

Maamba Collieries Limited (MCL) is on schedule with the construction of a US$800 million coal-powered thermal electricity generation plant in the Sinazongwe (Southern Province). The project is the only large source of fossil fuel in Zambia and is served by a branch of the Mulobezi railway.

The construction of the first-ever coal plant in Zambia is being fast-tracked through the 15 contracted companies that are carrying out shared and specialised works ahead of the October 2014 deadline, when the plant will offload its first power Mega Watt to the population, through ZESCO.

Electric power construction company Shandong Electric Power Construction Corporation is carrying out the engineering, procurement and construction of the main power plant. MCL was given a notice-to-proceed on March 26, 2012 and has done massive work since then. Currently, there are two shaft units under construction at Maamba. The first is expected to be completed in October next year, while the second one will be commissioned in early 2015.

MCL has also been engaged to construct a 330 KV double circuit transmission line from Maamba to Muzuma substation, owned by Zesco. The Maamba Energy Coal plant will then offload its power into the national grid, through the double circuit transmission line, which will run a total distance of 46 km from Maamba to Muzuma.

Presently, about 30% of the combined works related to the construction of the power plant have been achieved and the construction works have been intensified to meet the deadline, when the company will contribute the first 150 MW of electricity to the national grid, states MCL.

The Maamba coal mine is being developed under PPP with ZCCM-IH. GRZ is a 35% shareholder of MCL through ZCCM while Nava Bharat Ventures holds the remaining 65% of shares.

The MCL is breathing more life into Sinazongwe and the rest of the country. It is being delivered rapidly and the Government is to be commended. However, there are worrying reports that Nava Bharat Ventures is holding dark corner meetings with Government so that Zambia should forgo dividends when the project comes on stream. It is arguing that "ZCCM Investment Holdings has not contributed any funds".

But is contribution of funds the only criteria? It has previously need made clear by GRZ that it expects to get equity from partnering with foreign investors in energy and mining on the basis of a "free carry" since this is our country and our mining resources. Its called an "exogenous right". The proposal was 35% in these sorts of investment. Very much in line with the LCM deal. This approach is in fact very consistent with what Angola and other countries do. One hopes Energy Minister Chris Yaluma is not again on verge of another u-turn.

Chola Mukanga | Economist
Copyright © Zambian Economist 2013

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