Mon, 03 Apr 2017 12:32:37 +0000
ZIMBABWE has opened discussions with Zambia over payment of the US$114. 8 million interest on the Federation-era debt that Harare owes Lusaka.
The debt has been threatening co-operation between the two countries on the proposed construction of the massive Batoka power project.
Zimbabwe Finance and Economic Development Minister, Patrick Chinamasa, last week told journalists at the opening of the Batoka Gorge Hydro-electric Power, Investors Conference at David Livingstone Safari Lodge in Livingstone that the two countries have opened up discussions to map the way forward on the issue.
“Zimbabwe still owes Zambia about US$114. 8 million in interest but we have started engaging Zambia on how we can pay it and we will not want to discuss this in public,” said Chinamasa.
The interest component emanates from a US$70 million debt to Zimbabwe which the country inherited after taking over power generation assets that were shared with Zambia.
The debt was for the shared cost of the Kariba Dam construction and associated infrastructure during the tenure of Central African Power Corporation (CAPCO), a power firm jointly owned by the governments of Zimbabwe and Zambia when they were still part of the Federation of Rhodesia and Nyasaland, which was dissolved in 1963.
The debt also included assets taken over from CAPCO. The US$70 million principal amount has since been paid off by the country’s integrated power generation and distribution group, ZESA Holdings.
The amount remained outstanding, and Zimbabwe in February 2012 signed a new acknowledgement of debt with a payment plan.
Government then transferred the debt to ZESA Holdings saying it was the beneficiary of the distributed assets. ZESA Holdings was, however, pressured to pay the principal amount after Zambia threatened to pull out of a deal for the two Southern African countries to jointly construct the Batoka Gorge Hydro Power Station on the Zambezi River.
Zimbabwe and Zambia signed a Memorandum of Understanding (MoU) to jointly construct Batoka Gorge Hydro Power Station in 2012, with each country expected to get 1 600 Megawatts (MW) of electricity from the project, a development which would help boost power supply in the two Southern African countries.
The agreement on the Batoka project, situated about 54 kilometres downstream of Victoria Falls on the Zambezi River, was, therefore, dependent on Zimbabwe’s commitment to pay off the US$70. 8 million debt.
