China should be urged to respect its international obligations to reduce green emissions while the Zimbabwean government must be encouraged to be a responsible custodian of natural resources.
Lake Kariba, Zimbabwe. © Getty
As the world’s leading electricity producer from renewable energy sources, China insists on financing only clean energy projects and aims to transition to renewable energy, both domestically and overseas. Without any doubt, the extent of success or failure of the Paris Agreement will be largely determined by the way China finances projects in Belt and Road Initiative (BRI) signatory countries. President Xi Jingping has himself insisted on a “open, green and clean” Belt and Road. However, the carbon- intensive megaprojects that China is currently investing (13 across Africa) and plans to invest (projects) in Africa has once again reinforced and laid bare the severe disjuncture between its promises and actual investments. China now finds itself increasingly isolated and virtually alone in funding coal projects across Africa.
Some Chinese investments overseas, particularly in Africa, are skewed towards harnessing dirty coal power. Such investments do not reflect any green undertones and belie Chinese promise of promoting sustainable investment.
Within China, there is certainly an urgent domestic incentive to invest in renewable energy in order to tackle air and water pollution and socio-economic instability. But some Chinese investments overseas, particularly in Africa, are skewed towards harnessing dirty coal power. Such investments do not reflect any green undertones and belie Chinese promise of promoting sustainable investment. These developments are happening at a time when the world is moving away from dirty and cheap coal-fired power, and multilateral organisations are increasingly refusing to fund coal projects. The fact that China has massive capacity in all forms of renewable electricity generation makes the intent behind certain Chinese projects in Africa questionable and perplexing. Financing such projects incur high reputational risks and stands also against the vision and spirit of South-South cooperation.
Sengwa coal power plant
One such example is the massive $3 billion coal power plant in Zimbabwe’s northern city of Sengwa. After completion, the new plant is touted to generate 2,800 megawatts of power and is a joint effort between Zimbabwe’s RioZim — a subsidiary of Australian giant Rio Tinto, and a consortium of Chinese state-owned enterprises led by Wuhan-based infrastructure contracting company China Gezhouba Group. It is reported that Gezhouba will be the lead contractor and will be responsible for raising additional capital. In addition, the state-owned Power China will build a 250 kilometre water pipeline for the plant along with transmission lines.[i] Furthermore, on the financing side, the Industrial and Commercial Bank of China (ICBC) wants to get involved, and the state-owned insurance company Sinosure will provide risk insurance. The project will be built in four phases — 700 mw at a time.
The debate and rationale behind the Sengwa coal project is very complicated.
This deal is very crucial from President Emmerson Mnangagwa’s governments’ perspective since Zimbabwe is grappling with severe chronic power outages lasting up to eighteen hours per/day. Currently, Zimbabwe generates and imports only 1,300 mws of electricity, which is about half of the total 2,200 mws output it requires daily. Therefore, this deal provides an opportunity for Zimbabwe to close its current energy deficit. In addition, the project will serve two purpose: provide employment opportunities for locals, and project the Zimbabwean government as opening its economy and inviting foreign investments. However, the debate and rationale behind the Sengwa coal project is very complicated.
There are two sides to the story. On one hand, people certainly need power. Coal is cheap, affordable, readily available, and China has a proven track-record of getting projects up and running quickly. All the major Chinese state-owned companies that deal with large-scale infrastructure projects are involved in the Sengwa power project, and the finance is also readily available. However, coal energy is one of the biggest contributors of greenhouse emissions leading to adverse ecological and socio-economic impact on local communities. Coal is economically unsustainable and is also a huge consumer of water. This poses serious problems because the Sengwa region is prone to disasters like drought and might even face floods in the coming seasons. Drought has led to acute water shortages with several reservoirs running dry, and in many instances whatever low amounts of water that is stored gets lost through leakage and theft. Therefore, the government’s decision to invest in a coal project at a time when water is not easily available raises several questions. Moreover, Zimbabwe already has four thermal power stations Hwange (920 mw), Munyati (100 mw), Bulawayo (90 mw) and Harare (80 mw), which are working with very limited capacities and are fraught with technical issues.
Given the Covid-induced economic downturn confronted by most economies, it seems highly unlikely that Zimbabwe will be able to pay off the loan in the future.