OVER the last five years Zimbabwe's energy regulator has licensed more than 30 independent power producers (IPPs), but only eight of them have taken off and are currently operational.
Zimbabwe liberalised the its energy sector in a bid to promote the participation of private capital but with little foreign capital flowing into Harare because of its status as a high-risk investment destination, most of the projects have suffered a stillbirth.
"Most licensed IPPs are failing to take off due to the perceived country risk, which makes it difficult for IPPs to secure funding for their projects.
"The lack of funding for project preparation to the bankability stage is another impediment, which is causing the failure of IPP project take-off," Zimbabwe Energy Regulatory Authority (Zera) chief executive Eddington Mazambani told Standardbusiness.
Mazambani said a paltry $130 million had been pumped into the capital-intensive sector since it was opened up to private players.
Industry sources say foreign investors have shown a great deal of interest in the sector but confidence issues in the larger economy stops them from committing themselves.
For investors the Zimbabwean market remains tricky because of the inability to repatriate dividends to foreign-based shareholders.
Currently more than half a billion dollars in dividends is stuck in the country as the ongoing shortages of foreign currency make it difficult for companies to remit dividends outside the country.
Another concern has been that of off-take agreements with the power utility Zesa with industry urging government to introduce the concept of competitive bidding when procuring renewable energy, particularly solar and wind from IPPs.
Some of the IPPs, which have managed to take off include the Duru mini hydro with 2,20 megawatts (MW), Green Fuel (18,30MW), Nyamhingura mini hydro (1,10MW), Hippo Valley Estates (33MW), Triangle Estates (45MW) and Pungwe Power Station (19MW).
Most of the IPPs are situated in the eastern province whose mountainous terrain has proved to be conducive for mini-hydro power plants.
According to Zera, the IPPs contribute 137,08 gigawatt hours (GWh) power to the national grid.
Zimbabwe's power demand averages 1 400MW per day, but the country only generates around 1 200MW, relying on imports from South Africa, Mozambique and the Democratic Republic of Congo to supplement local supplies.