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AFRICAN DEVELOPMENT BANK
Original: English
Language: English
PROJECT: Emergency Power Infrastructure Rehabilitation Project
COUNTRY: ZIMBABWE
…........................................................................................................................................................
PROJECT APPRAISAL REPORT
Date: 15 February 2011
Appraisal Team
Team Leader Mrs. E. MUGUTI Senior Power
Engineer ONEC.2 3267
Team Members Mr. N. KULEMEKA Principal
Social ONEC.3 2336
Mr. Z. BELLOT
Investment Officer
ONEC.2 2276
Mr. A. OWUSU-ANSAH Consultant Power
Engineer ORSA
Mr. M. BEDROUS Consultant
Environmentalist ONEC.3
Sector Manager Mr. E. B. NZABANITA ONEC.2 3081
Sector Director Ms. H. CHEIKHROUHOU ONEC 2140
Regional Director Mr. E. FAAL ORSA 3775
Mr. F. KANONDA Senior Financial Analyst ONEC.2 2723
Mr. E. ALEMSEGED Senior Water & Sanitation Engineer OWAS 3489
Mr. J.P. MUTSINZI Principal Power Engineer ONEC.1 2300
Peer Review
Ms. R ARON Senior Social Development Specialist ONEC.3 2792
Mr. U. DURU Environmental Engineer ONEC.3 3817
Mr. C.VWALA-ZIKHOLE Senior Disbursement Specialist FFCO.3 2746
TABLE OF CONTENTS
1. INTRODUCTION 1
2. BACKGROUND 1
2.1 General Background ....................................................................................................... 1
2.2 Institutional Set Up and Governance of Power Sector ................................................... 2
2.3 Overview of the Power Sector ......................................................................................... 2
2.4 Project Linkages & Strategic Context ............................................................................ 4
2.5 Rationale for Bank’s Involvement ................................................................................... 5
2.6 Donor Activities and Aid Coordination .......................................................................... 6
3. PROJECT DESCRIPTION 6
3.1 Project Outcomes ............................................................................................................ 7
3.2 Project Outputs ............................................................................................................... 7
3.3 Project Goals and Objectives ......................................................................................... 7
3.4 Project Design and Detailed Description ....................................................................... 9
3.5 Project Costs and Financing Arrangements ................................................................... 9
3.6 Socio-Economic and Environmental Impacts ................................................................. 9
3.7 Financial Performance……………………………………………………………………… .10
3.8 Environmental and Social Impacts………………………………………………………… 11
4. PROJECT IMPLEMENTATION 15
4.1 Implementation Arrangements ....................................................................................... 15
4.2 Implementation Schedule ............................................................................................... 16
4.3 Procurement Arrangements ........................................................................................... 16
4.4 Disbursement Arrangements and Financial Management ............................................ 16
4.5 Monitoring and Evaluation ............................................................................................ 17
5. PROJECT JUSTIFICATION, SUSTAINABILITY & RISK MANAGEMENT…… 17
5.1 Project Justification 17
5.2 Project Sustainability 18
5.3 Risk Management 18
6. CONCLUSIONS AND RECOMMENDATIONS 19
6.1 Conclusions..................................................................................................................... 19
6.2 Recommendations ........................................................................................................... 20
i
Annexes
Annex 1 - Map of the Country and Project Location
Annex II – Project Cost Estimate
Annex III - Zimbabwe: Overall Power Infrastructure Rehabilitation Excercice
Annex IV- Implementation Diagram
Annex V – Procurement Arrangements
Annex VI – Project Management Teams
Annex VII – Economic performance
Annex VIII – Environmental and Social Analysis
Annex VIII.1- Environmental and Social Management Management Plan Summary
Annex VIII.2 - TOR for Environmental and Social Audit.
Annex IX.1 - Short Term Emergency Recovery Programme (Strep) – Budget.
Annex IX.2 – Procurement plan
Annex X - ZESA Holding Group Performance Analysis
ii
Currency Equivalents
January 2011
1UA = US Dollar (USD) 1.54
FISCAL YEAR:
1 Jan – 31 Dec
Acronyms and Abbreviations ADB African Development Bank
ADF African Development Fund
DFID Department for International
Development, UK
EA Executing Agency
EPIRP Emergency Power
Infrastructure Rehabilitation
Project
ESIA Environmental and Social
Impact Assessment
EMA Environmental Management
Agency
FSF Fragile State Facility
GOZ Government of Zimbabwe
GPA General Political Agreement
ICB International Competitive
Bidding
IG
IPP
Inclusive Government
Independent Power Producer
MDTF
MMD
MEPBF
Multi Donor Trust Fund
Mines and Mineral
Development
Macro-Economic Policy and
Budget Framework
MOE Ministry of Environment
MOEP Ministry of Energy and Power
MOF Ministry of Finance
MOWRDM Ministry of Water Resources
Development and Management
MPDE Matrix for Project Design and
Evaluation
NCB National Competitive Bidding
NGO Non-Governmental
Organization
NOCZIM National Oil Company of
Zimbabwe
O&M Operation and Maintenance
QPR Quarterly Progress Report
PA
PMT
Procurement Agency
Project Management Team
REA Rural Electrification Agency
SADC
SAPP
STERP
Southern African Development
Community
Southern African Power Pool
Short Term Emergency
Rehabilitation Program
T&D
UN
Transmission and Distribution
United Nations
USD United States Dollar
WACC Weighted Average Cost of
Capital
WB The World Bank
ZESA Zimbabwe Electricity Supply
Authority
ZETDC
ZERC
Zimbabwe Electricity
Transmission and Distribution
Company
Zimbabwe Electricity
Regulatory Commission
ZPC
ZRA
Zimbabwe Power Company
Zambezi River Authority
Zim-Fund Zimbabwe Trust Fund
iii
ZIMBABWE: EMERGENCY POWER INFRASTRUCTURE REHABILITATION PROJECT
MPDE MATRIX
HIERARCHY OF OBJECTIVES EXPECTED
RESULTS
PROJECT
BENEFICIARIES
PERFORMANCE
INDICATORS, SOURCE,
PERIODICITY
INDICATIVE
TARGETS,
TIMEFRAME
RISKS, MITIGATING
MEASURES
Goal:
To support the implementation of the
Government’s Short Term Emergency Recovery
Program (STERP) by assisting implementation of
the emergency power infrastructure rehabilitation
program to increase access to affordable and
reliable electricity supply at competitive prices
Impact:
Increased access to
affordable and reliable
electricity supply at
competitive prices.
The Electricity Consuming
public in Zimbabwean
Impact Indicators
Access to reliable electricity;
Source:
ZESA demand and supply statistics
ZETDC customer Accounts
The Electricity consuming
public having access to reliable
electricity by 2012.
Source:
ZESA demand and supply
statistics
ZETDC Customer Accounts
Continued improvements and
stabilization in the political and
socio-economic conditions in
the Country.
Continued injection of
investment capital by GOZ and
ZESA into the Zimbabwean
Power Sector, especially into
ongoing Hwange rehabilitation
Purpose:
1. To improve the reliability of power supply in
an environmentally sound manner through the
rehabilitation of the Ash Plant at Hwange Power
Station (HPS) and the sub-transmission and
distribution facilities in the country.
Outcomes:
Improved Ash handling at
HPS
Improved reliability of
sub-transmission and
distribution networks
Improved electricity
supply to the treatment
plant of Harare City and
other urban water supply
systems.
Improved environmental
management at HPS
The entire electricity
consuming public in
Zimbabwe
Population of Greater
Harare Metropolitan and
other municipalities
HPS staff and impacted
surrounding communities
Outcome Indicators:
Increased generation output.
No of customers to whom service is
restored
Reduction in number of system outages
due to incidents in T&D network
Sources
Operational reports of HPS and ZETDC;
Environmental & Safeguards Reports of HPS
Electricity supply services
restored to about 22,000
customers in various
neighborhoods across the
country by end of 2012.
Efficiency of Procurement
Agent and Implementing Entity
to mitigate implementation risk.
.
Effective involvement of
Project Management Teams s to
contribute to implementation
success;
Adequate measures designed to
control vandalism of T&D
network to ensure network
integrity and security
Improvements in institutional
setup for environmental
management both at HPS and
ZESA to ensure effective
implementation of ESMP
iv
Activities:
- Provide engineering services;
- Replace and refurbish components in the Ash
handling plant such as slurry pumps, ash pumps,
sluicing water pumps, booster pumps, sealing
water pumps, beilge pumps and overflow sump
pumps; replace 4 discharge lines; 4 clinker
grinders; 1 fluid coupling; 500m of 11kV
transformer cable and 500m of 3.3kV 3-core
cables.
- Reinforce Sub-Transmission and Distribution
Systems
procure and install sixteen sub-transmission level
transformers
Procure and install 800-900 33/0.4kV distribution
transformers
Procure and install 800-900 11/0.4kV distribution
transformers
-Procurement of TA to conduct Environmental &
Social Audit and prepare ESMP for HPS
Procure electrostatic precipitators and air quality
monitoring equipment
Inputs/resources (in millions):
Zim-Fund : USD 35.00m (UA 22.727m)
Total : USD 35.00 m (UA 22.727m)
Outputs:
Fully rehabilitated Ash
Plant at HPS
A rehabilitated T&D
network
Improved operation of
Ash plant for ash removal
and disposal.
Rehabilitated sub-
transmission and
distribution networks
An updated and
comprehensive ESMP for
HPS
Environmental mitigation
equipment
The manufacturers and
suppliers of electro-
mechanical equipment
Consultants in electrical
field and environmental
and social safeguards
Contractors, sub-
contractors, communities
getting jobs.
Electricity consuming
public in Zimbabwe
Hwange Power Station
Output Indictors
Tender documents prepared, Contracts
awarded and works supervised;
Ash Handling Plant at HPS
rehabilitated and refurbished
Restoration of Service to electricity
customers in various neighborhoods
across the country by December 2012.
An updated and comprehensive ESMP Prepared by December 2012
Electrostatic precipitators and air
quality monitoring equipment installed
Source,
ZPC – Operational Reports ZETDC – Operational Report
Number of Engineering
Services Contracts awarded and
signed by Oct.2011.
Implementing Entity assisted by
ZESA constituted Project
Management Teams (PMTs).
Project coordination and
management services
Service restored to 22,000
electricity consumers by
December 2012
Signed contracts and
completion of E&S Audit and
preparation of ESMP by Dec
2012
Equipment installed and
functioning by December 2012
Risk of implementation delays.
To be mitigated through close
follow-up and monitoring of
progress by the Bank through
Procurement Agent and MMU;
Coordination problem will be
mitigated by the PSC to be
established with reps from
stakeholder entities.
Delayed creation of an EMU at
HPP and recruitment of staff.
Risk of implementation delays.
To be mitigated through close
follow-up and monitoring of
progress by the Bank through
Procurement Agent and MMU
v
Summary
Electricity is fundamental to Zimbabwe’s economic and social development. Electricity supply
interruptions, including shortages therefore have serious repercussions on any efforts of Zimbabwe’s
Inclusive Government (IG) to successfully turnaround the economy and to achieve sustainable economic
and social growth.
In its Short Term Emergency Recovery Program (STERP) of February 2009 and subsequently the current
Three Year Macro-Economic Policy and Budgetary Framework (MEPBF) (2010-12) the Government of
Zimbabwe (GoZ) has prioritized the rehabilitation of dilapidated generation and transmission
infrastructure to restore electricity generation capacity and supply reliability as a key factor in the
economic turnaround strategy. The Government’s efforts are however stifled by resource constraints
owing to the sheer magnitude of financial resources required for infrastructure rehabilitation generally
and for power infrastructure in particular which is estimated at about USD 1.0 billion.1
The Zimbabwe Multi-Donor Trust Fund ( “Zim-Fund”) established on 31 May 2010 by a group of donors
and administered by the African Development Bank to complement the on-going Analytical Multi-Donor
Trust Fund (“AMDTF”), administered by the World Bank, seeks to contribute to the Government’s
economic recovery efforts through infrastructure rehabilitation amongst others.
The proposed Emergency Power Infrastructure Rehabilitation Project will improve the provision of
adequate and reliable electricity in an environmentally sound manner by the rehabilitation of the Ash
Handling Plant at the Hwange Power Station (HPS) and the power transmission and distribution facilities
in the country. The project comprises the refurbishment of the Ash Plant and replacement of Sub-
Transmission and Distribution level infrastructure throughout the country. The project will also generate a
comprehensive environmental and social management plan ESMP for the HPS that will help reduce the
negative environmental effects of the coal fired power station when implemented. Improving availability
of grid electricity reduces the demand for firewood from urban households. A typical urban household in
Zimbabwe uses electricity for cooking and water heating. Frequent power outages have seen areas around
the urban centres being deforested from tree cutting for firewood. In addition business entities
increasingly rely on diesel power generation which pollutes the local environment and yields higher
carbon dioxide emissions than grid electricity since the generation systems in Zimbabwe is mixed hydro
and thermal. Most of the electrical equipment being refurbished will achieve higher energy use
efficiencies and therefore consume less energy when they are re-commissioned.
The total project cost is estimated at USD 35.00 million (UA 22.727 million) and will be financed solely
from the Zim-Fund. Zim-Fund resources of USD 14.87 million (UA 9.656 million) will finance the
rehabilitation of the Ash Plant at the Hwange Thermal Power Station while an additional USD 14.96
million (UA 9.714 million) finances the rehabilitation of sub-transmission and distribution networks. A
further USD 5.17 million representing the cost of Environmental consulting services for the design of an
ESMP for HPS, environmental impacts mitigation equipment as well as Engineering Supervision and
Project Accounts Auditing will also be provided by the Fund. The works will be implemented over a
period of 21 months under the supervision of an engineering supervision consultancy- the Implementing
Entity, assisted by Project Management Teams (PMTs) at HPS and ZETDC for the generation and T&D
components respectively. Procurement of all goods, works and services will be handled by a Procurement
Agent (PA) hired by the Bank on behalf of the Government of Zimbabwe. The project will receive
overall guidance from a steering committee to be constituted as elaborated in section 4.1.6.
1 Short Term Emergency Recovery Programme (STERP) Budget is presented in Annex IX
1
1. INTRODUCTION
1.1 Physical infrastructure and the related soft infrastructure systems are the means through which
trade and other social – economic activities take place and at the same time act as building blocks
towards economic development. Zimbabwe faces a number of Infrastructure challenges due to lack of
resources for maintenance and new investments. Power supplies for instance are only 40% of installed
capacity, and provide about half of national peak demand, even with the reduced economic activity
engendered by the political crisis in the country. Currently, the country is unable to meet its electricity
requirements despite import of about 300 MW to supplement local generation and has resorted to daily
load shedding to address the problem. The rehabilitation of key power sector assets in the generation,
transmission and distribution systems has been identified as the fastest and least cost option for
restoring capacity to increase electricity supply in order to meet current electricity demand and enhance
system stability. Similarly, it is important to strengthen the revenue collection capability of the
electricity utility to enable internal mobilization of resources for the maintenance of the power system.
1.2 Following the signing of the Global Political Agreement (GPA), the Inclusive Government’s
(I.G.) agenda was defined by The Short Term Emergency Recovery Program (STERP) of February
2009. A key priority area of STERP was the rehabilitation and upgrading of the country’s power sector
infrastructure. Completion of ongoing rehabilitation works at the Hwange thermal power station and
rehabilitation of transmission and distribution infrastructure were specifically identified as critical
interventions underpinning the success of the plan. At the close of program implementation in
December 2009, a review of the STERP indicated very limited progress made on infrastructure
restoration, due to inadequate funding.
1.3 The STERP was followed by a three year Macro-Economic Policy and Budget Framework
(MEPBF) (2010-2012), which aims at building on the gains of the latter and achieving rapid and
sustainable economic growth and development. The MEPBF has again prioritized the rehabilitation,
and upgrading of infrastructure including that of water supply, sanitation, power, transportation and
telecommunication. Since 2009 the IG has made resources available to the electricity utility - ZESA to
address critical needs at two important generation assets; the Hwange and Kariba Power Stations as
well as support some transmission and distribution system improvements. However, these are
inadequate compared to the resources required for rehabilitation of both generation and transmission
systems to restore operational capacity and system reliability and stability.
1.4 It is against this background that a number of Donors have established a Multi-Donor Trust
Fund (Zim-Fund) to provide additional resources required to assist the IG of Zimbabwe to continue
with emergency rehabilitation works in various sectors in order to restore the services in the country
and boost economic recovery. The Bank has been mandated to administer the Zim-Fund from which
assistance to the proposed Emergency Power Infrastructure Rehabilitation Project will be drawn.
2. BACKGROUND
2.1 General Background
2.1.1 In spite of imports of about 35% of its power requirements from Mozambique, South Africa,
Zambia and the Democratic Republic of Congo, the country continues to face power supply deficits
due to under-performance of its generation facilities as a result of obsolescence of plant and equipment.
Power import now places significant constraint on the already strained foreign currency availability.
2
2.2 Institutional Set Up and Governance of Power Sector
2.2.1 The Ministry of Energy and Power Development has oversight responsibility for the energy
sector with a mandate for policy formulation, performance monitoring, regulation, development and
promotion of renewable energy. The Ministry also supervises and oversees the National Oil Company
of Zimbabwe (NOCZIM) and Zimbabwe Electricity Supply Authority.
2.2.2 Since 2002, the GOZ through the Electricity Act and the Rural Electrification Fund Act both of
2002 has pursued a reform agenda that has led to the unbundling of the electricity company into ZESA
Holdings and its subsidiaries, Zimbabwe Power Company (ZPC) and Zimbabwe Electricity
Transmission and Distribution Company (ZETDC). The reforms also led to the creation of a Rural
Electrification Agency and an electricity regulator, the Zimbabwe Electricity Regulatory Commission
(ZERC). Although reforms were meant to encourage private sector participation through Independent
Power Producers (IPPs), there has been limited investment from private participants thus far. The
power sector is therefore dominated by ZESA Holdings who through its subsidiaries ZPC and ZETDC,
imports, generates and distributes electricity in the country.
2.2.3 Recent reform in the power sector has not yielded much result, particularly that of attracting
Independent Power Producers due the uncertainties in the political climate. Investor confidence in the
sector however is beginning to grow. According to the Minister of Energy and Power Development,
Zimbabwe has licensed five independent power producers whose projects are aimed at helping a
struggling power sector by doubling current electricity output to 4,450 megawatts versus the current
2,000 MW capacity.
2.2.4 Other institutional players include the Zambezi River Authority (ZRA) which was established
by Acts in both the Zimbabwean and Zambian parliaments to operate, monitor and maintain the Kariba
dam complex and other dams on the Zambezi within the jurisdictions of the two countries. Coal, coal
bed methane and other energy-related minerals are under the jurisdiction of the Ministry of Mines and
Minerals Development (MMD). The MMD supervises Hwange Colliery Company which owns the
largest operational coal mine in Zimbabwe and has been the sole supplier to HPS until very recently.
2.3 Overview of the Power Sector
2.3.1 Zimbabwe’s power sector plays a strategic role in enabling and promoting economic activity
across the economy, as well as delivering key social services. Due to its geographic location,
Zimbabwe’s power network provides a strategic hub for the transfer of power within the Southern
Africa Power Pool (SAPP). Until 2000 ZESA was amongst the top three performing utilities in sub-
Saharan Africa; today the Zimbabwe power sector has been physically and financially compromised.
2.3.2 The quality and reliability of electricity supply services in Zimbabwe have been affected by the
economic downturn, falling revenue streams for the power sector utility ZESA, lack of investments in
generation, transmission and distribution infrastructure and lack of capacity to manage an aging
infrastructure. These constraints present serious challenges for the power sector in Zimbabwe.
2.3.3 Dilapidated generation infrastructure: Generation infrastructure in the country is rundown as
a result of lack of investments and needs urgent rehabilitation to restore lost capacity. Zimbabwe has
two major power supply sources: the Hwange coal-fired thermal power station with an installed
capacity of 920 MW, and the Kariba South Bank hydro power station with an installed capacity of 750
MW. There are also 3 minor coal fired stations with a combined capacity of 150 MW. Overall installed
generation capacity is about 1960 MW but available capacity presently stands at just over 1100 MW.
3
The Hwange thermal power plant presently produces between 400-550MW of power out of its 920
MW capacity due to regular failures of components in both the generation blocks as well as common
auxiliary facilities and lack of spares for maintenance. Current national peak demand is estimated at
between 1800 and 2100 MW resulting in power supply shortfalls of between 700 and 900 MW This
situation has given rise to the ongoing power curtailment exercise whereby between 400 - 600 MW of
national load is shed despite imports of about 300 MW. Zimbabwe Power Supply Capacity is
summarized in Table 1.
Table 1: ZIMBABWE POWER SUPPLY CAPACITY (MW)
Installed Capacity 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009
Hwange 920 920 920 920 920 920 920 920 920 920
Kariba 694 722 736 750 750 750 750 750 750 750
Small Thermals 290 290 290 290 290 290 290 290 290 290
Total 1 904 1 932 1 946 1 960 1 960 1 960 1 960 1 960 1 960 1 960
Dependable Capacity
Hwange 780 780 780 780 780 780 780 780 780 780
Kariba 694 722 736 750 750 750 750 750 750 750
Small Thermals 245 245 245 245 245 245 245 245 245 245
Total 1 719 1 747 1 761 1 775 1 775 1 775 1 775 1 775 1 775 1 775
Available Capacity
Hwange 496 716 659 498 583 579 435 421 388 342
Kariba 511 531 588 701 723 725 711 727 747 743
Small Thermals 133 105 101 43 110 42 26 26 34 18
Total 1 140 1 352 1 348 1 242 1 416 1 346 1 172 1 174 1 169 1 103
Peak Demand 1 986 2 013 2 028 2 007 2 069 2 066 1 904 1 758 1 779 1 800
Supply Deficit -845 -662 -680 -765 -654 -720 -732 -584 -610 -697
Sources: ZESA Operational Statistics 2010
2.3.3 Dilapidated and Vandalized Transmission and Distribution infrastructure: Zimbabwe’s
Transmission and Distribution network is made up of 420kV, 330kV, 220kV, 132kV, 88kV and 66 kV
lines and substations. The distribution system is made up of 33kV, 22kV 11kV and 380/220V lines and
substations. The transmission and distribution lines have a total length of over 120,000 (one hundred
and twenty thousand) km servicing a customer base of close to 600,000 (six hundred thousand)
customers. The Zimbabwe Electricty Transmission and Distribution Company (ZETDC) is responsible
for the development, operation and maintenance of the transmission and distribution network. In
addition, ZETDC is responsible for meter reading, billing, cash collection, and credit control of the
retail business.
2.3.4 During the peak of the economic crisis in the country, a number of transmission line structures
(tower, towers members), transformers, distribution network terminal equipment, overhead line cables
and communication equipment were vandalized by the public, posing a serious challenge to the
stability and reliability of the transmission and distribution system as a whole. Presently about 22,000
customers of the utility in various neighborhoods all over the country are without electricity as a result
of vandalism of some 1,400 distribution transformers scattered within the network. These network
elements need to be replaced while measures are adopted by the utility to prevent potential vandalism
in the future.
4
2.3.5 Financial insolvency: Due to a long history of sub economic tariffs, and despite recent tariff
adjustments, the utility remains financially insolvent. The impacts of the economic crisis during the last
three years (hyperinflation and price controls) have aggravated the situation, rendering the utility
technically insolvent and unable to pay either its trade creditors (electricity imports) or to service its
external debt. ZESA has external debt amounting to USD 426 million and about USD 98 million of
trade creditor arrears for power imports2. The dollarization of the economy in 2009, receivables
negotiations with large consumers and the rollout of prepaid metering program in 2010 helped the
utility to earn revenues of about USD 40 million per month as compared to USD 6 million per month
earned in the previous year. A top priority therefore is to improve electricity revenue collection by
strengthening and expanding the prepaid metering program and the general billing system.
2.3.6 Legacy Issues. There has been a steady decline in ZESA’s operational, commercial and
financial performance since 2000 when ZESA was collecting about 97% of what it billed for energy
sales, with customer receivables standing at 32 days. The macro-economic situation of the past several
years, characterized by hyperinflation and price controls, lack of access to domestic/foreign financing,
and the downturn in economic activity, has left the power sector struggling to free itself from a huge
financial burden and degradation of physical assets. ZETDC and ZPC were struggling to reach a break-
even position on a cash-flow basis in 2009. The most significant financial consequences/legacy issues
are the increasing level of unpaid foreign debt and trade creditor arrears to regional utilities, and the
quality and collectability of customer accounts receivable. Additionally, there has been a massive
“brain drain” which led to a deterioration of institutional capacity that gradually eroded ZESA’s prior
reputation for efficient management and financial practices. ZESA has begun to rebuild its capacity
through a vigorous training program, but will require time and more resources to regain its former
competencies.
2.4 Project Linkages & Strategic Context
2.4.1 In February 2009, the Southern African Development Community (SADC) brokered political
solution (the Global Political Agreement-GPA) led to the formation of an IG which moved quickly to
prepare the STERP. The key priority areas of STERP included: the economy, infrastructure, social and
human rights. On infrastructure, the STERP prioritized the upgrading of the country’s electricity
generation, transmission and distribution infrastructure. Completion of the rehabilitation of Hwange
power plant and rehabilitation of transmission and distribution infrastructure was specifically identified
as a critical factor underpinning the success of the plan. It was in this context that the Government
requested the Bank’s financial assistance for the rehabilitation of Hwange thermal power plant and
transmission and distribution facilities all over the country. The STERP came to a close at the end of
2009. A progress review of the program revealed that significant gains were made in some areas
particularly those relating to the economy, including inflation reduction, resuscitation of business
activity, elimination of price distortions, better management of public resources, normalization of
financial services, dialogue with the international community, as well as confidence building. Limited
progress was however made in the restoration of basic services such as water supply and sanitation and
power supply, largely due to inadequate funding which seriously constrained infrastructure
rehabilitation initiatives. This project is targeted at enhancing power infrastructure restoration.
2.4.2 Since 2009, the IG has made resources available to ZESA to address critical needs at both
Hwange and Kariba Power Stations as well as support some transmission and distribution system
improvements. The resources required for rehabilitation of both generation and transmission systems
2 Source: ZESA Financial Statement: September 2010
5
are massive, estimated at about USD1.0 billion. Resources availed by the IG so far have resulted in
some improvement but these are still too little compared to requirements for achieving operational
capacity and system reliability and stability. This project is an effort to augment infrastructure
rehabilitation resources and complement government initiatives in this sector
2.5 Rationale for Bank’s involvement
2.5.1 Zimbabwe has been under non-accrual status with the Bank Group since 2000 when it started
accumulating arrears on its loans repayments. Although the Bank had to suspend all its operations in
the country because of this status, it has remained engaged through policy and arrears dialogue and
provision of humanitarian assistance. Since the imposition of sanctions, the Bank has only been able to
provide the country with humanitarian assistance in response to food crisis in 2002 and 2005 and
cholera outbreak of 2008.
2.5.2 Zimbabwe has also been isolated from much of the international community and International
Financial Institutions due to the political situation that has prevailed in recent years, and will need
support on reengagement. Consistent with the Bank mandate, the GOZ has requested the African
Development Bank (ADB) to play a leading role in efforts to revitalize the Zimbabwean economy.
2.5.3 In response to this request, the Bank in April 2009 prepared a Short Term Strategy for
Zimbabwe anchored on supporting the IG in the implementation of the STERP in a non-financing role
within the broader donor effort, and with the eventual goal of full reengagement with Zimbabwe. The
Strategy centered on unlocking resources to develop and support a recovery and reform program, while
collecting data on infrastructure needs which would support the formulation of immediate and medium
term action plans. In the long term, the strategy is aimed at stimulating a strong private sector led
economy, including through strategic investment in selected infrastructure and capacity building. These
were identified as key in supporting social and economic activities, and thereby realizing Zimbabwe’s
full potential as a self-sustaining country. A needs assessment carried out jointly by the ADB with the
World Bank and UN identified the rehabilitation of the Hwange Power Station (HPS) and the
transmission and distribution system as urgent priority projects. After the needs assessment, the Bank
was given the lead role in the sectors within the infrastructure cluster.
2.5.4 The proposed Emergency Power Infrastructure Rehabilitation Project to be supported by a
Grant from the Multi Donor Trust Fund managed by the Bank therefore is consistent with the Bank's
strategy of supporting the IG in the implementation of outstanding priorities of the STERP and new
priorities of the current MEPBF. The project is also in response to the mandate given by the Donor
community to the Bank, to play a lead role in the infrastructure sector in Zimbabwe. It is consistent
with the Bank's short-term goal of unlocking resources to develop and support a recovery and reform
programme in Zimbabwe while at the same time using data collected on infrastructure needs to
formulate and implement immediate and medium term action plans. Strategically this provides a way
for the Bank to re-engage at a practical level with Zimbabwe. It is consistent with the Bank's longer-
term aim for the revival of a strong private sector led economy through amongst others, strategic
investment in selected infrastructure, and capacity building. Finally, the project supports the objectives
of the Government's Draft Energy Policy such as (i) increasing access to affordable energy services to
all sectors of the economy, (ii) improving capacity in the various players in the energy development
and delivery chain and (iii) managing energy related environmental and social impacts.
6
2.6 Donors Activities and Aid Coordination
2.6.1 As part of the process for re-engagement by the donor community in Zimbabwe, a Joint
“Scoping” Mission was undertaken in April 2009 by ADB, EU, the United Nation agencies (UN) and
the World Bank (WB) to work on the development of an appropriate framework for re-engagement,
subject to performance from the IG and satisfactory agreements on a number of issues, including the
arrears that the country has with ADB and other institutions.
2.6.2 The objective of the Scoping Mission were to: (1) agree on priority sectors; (2) agree on the
modus operandi for sector specific Joint Needs Assessment missions to be undertaken by sector
specialists from the various institutions; (3) identify required resources, both financial and technical
expertise and (4) identify modalities and implications of other processes, such as the ongoing dialogue
between the government and partner countries.
2.6.3 Since then, the World Bank and UNDP have organised semi-annual donor coordination
meetings with all the main donors to discuss issues pertaining to the political and economic situation
and where possible propose coordinated interventions in various sectors. Donor assistance has recently
focused on humanitarian, governance and HIV/AIDS related activities, and the funding is mostly
channelled through NGOs and the UN System.
2.6.4 The selection of priority sectors was largely guided by the STERP. The Electricity sector was
identified as a key sector in this plan. The STERP estimated the funding requirements for the sector at
USD 1 billion over the medium term, representing 12% of the estimated funding requirements across
all sectors of the economy (USD 8.4 billion)3.
2.6.5 The African Development Bank has been requested by a group of donors to assist Zimbabwe to
establish and administer the Zimbabwe Multi-Donor Trust Fund (the “Zim-Fund”), as a complement to
the on-going Analytical Multi-Donor Trust Fund (“AMDTF”), administered by the World Bank. The
purpose of the Zim-Fund, is to contribute to early recovery and development efforts in Zimbabwe by
mobilizing donor resources and promoting donor coordination in Zimbabwe, so as to channel financial
assistance to such efforts. Complementary to other existing funding mechanisms, the thematic scope of
the Zim-Fund focuses initially on infrastructure investments in the areas of water & sanitation and
energy. To achieve these goals, financial and technical support to activities that are consistent with the
Government’s recovery priorities; mobilization of pooled donor resources based on a common
understanding of the country’s recovery needs and effective coordination and complementarities with
other related activities funded outside the trust fund are critical.
3. PROJECT DESCRIPTION
3.1 The Project Outcomes
3.1.1 The main outcomes of the project include (i) improved environmental management at HPS (ii)
improved reliability of power transmission and distribution infrastructure in the country, (iii) improved
electricity supply to the treatment plant of the Harare city water supply as well as urban water supply
systems with a possible contribution to the reduction in the incidence of cholera and other water related
diseases.(iv) reduction in greenhouse gas emissions currently resulting from extensive tree felling for
firewood used by urban households and greenhouse gas emissions resulting from system inefficiency
and frequent failures. (v) reduced transmission and distribution losses due to rehabilitated and upgraded
equipment hence increased system efficiency.
3 Financing requirements identified in the STERP are included as Annex 1
7
3.2 Projects Outputs
3.2.1 Project outputs will be a refurbished Ash Handling Plant at HPS and reinforced sub-
transmission and distribution networks which will improve system reliability and allow the restoration
of supply services to about 22,000 customers in various neighborhoods across the country who
presently have no access to electricity services. There will also be a new ESMP for HPS that is based
on a thorough audit of the plant and its impacted environs.
3.3 Project goals and objectives
3.3.1 The overall goal of the proposed project is to support the implementation of the Government’s
Short Term Emergency Recovery Program (STERP) through increased access to affordable and
reliable electricity supply at competitive prices by implementation of the emergency power
infrastructure rehabilitation program.
3.3.2 The objective of the project is to assist improve the provision of adequate and reliable power
supply in an environmentally sound manner through the rehabilitation of the Ash Plant at HPS and the
sub-transmission and distribution facilities in the country.
3.3.3 The project will also help to improve the reliability of electricity supply to the treatment plant of
the Harare city water supply and other urban water supply systems and thereby help prevent another
cholera outbreak in the country. The project creates synergies with the “Emergency Water Supply and
Sanitation Rehabilitation Project” also financed by the ZimFund.
3.4 Project design and detailed description
3.4.1 The project is a segment of an ongoing power sector infrastructure rehabilitation program
identified by ZPC and ZETDC, subsidiaries of ZESA mandated to operate and maintain the Hwange
Power Station and T&D networks respectively. Components included in the proposed project are
selected from a list of critical interventions that need to be conducted in the rehabilitation of power
infrastructure to bring the power system to an acceptable level of performance. The full list of activities
and their associated costs under the program is presented in Annex III. During preparation and
appraisal of the Zim-Funded EPIRP, field visits were made to project sites at the HPS and consultations
held with stakeholders at ZESA, ZPC and ZETDC, the Energy ministry and the Finance ministry to
identify components in the list of activities that can be supported by the limited funds available. The
project has been defined to comprise five main components: (A) Rehabilitation of the Ash Handling
Plant at Hwange Thermal Power Station and (B) Rehabilitation of sub-transmission and distribution
facilities (C) Conduct of an Environmental and Social Audit and implementation of re-designed
Environmental and Social Management Plan, (D) Project Supervision and (E) Project Accounts
Auditing. Detailed equipment to be procured under components A and B are presented in Annex II.
The shaded components in Annex III indicate how the interventions being financed by the Zim-Fund
dove-tails into the Government/ZESA’s overall power sector rehabilitation exercise.
3.4.2 (A) The rehabilitation of the Ash Plant is critical for the continuous operation of generating
units at the Hwange Power Station by preventing the build-up of Ash in the boilers that can lead to a
complete shutdown of generating units. It is also necessary for the reduction of the negative
environmental impacts as a result of poor ash handling. The process of generating electricity in a coal-
fired plant involves the delivery of coal by conveyor belts from opencast mines to the plant, pulverizing
coal in coal mills associated with the generating units and blowing the pulverized coal by primary air
fans into the furnace where it is mixed with hot air and burnt to raise steam from water contained in the
boiler tubes. The steam drives steam turbines to produce electricity in a generator. The by-product of
8
the burnt coal, ash, then builds up in the furnace and needs to be pumped out, mixed with water and
discharged through Ash Lines to an Ash dam.
3.4.3 Presently, the Ash Plant for the four units of Stage I has only 1 pump out of 3 in service while
that at Stage 2 it has one pumping line available out of 2 in service. These plants are available 50% of
the time. Additionally only 2 lines out of 4 that take ash to the ash dam are working, restricting the
capacity to move ash from the boilers to the disposal dams and leading to an ash build-up in the boilers.
Frequent breakdowns of the remaining Ash plant always necessitate the shutdown of generating units
in order to prevent ash build up.
3.4.4 The rehabilitation of the Ash Plant comprises the replacement or refurbishment of slurry pumps,
ash pumps, sluicing water pumps, booster pumps, sealing water pumps, beilge pumps and overflow
sump pumps, all complete with motors and spares; replacement of 4 discharge lines; 4 clinker grinders
with spares; 1 fluid coupling with spares; 500m of failed 11kV transformer cable and 500m of damaged
3.3kV 3-core cables. The refurbishment of the ash plant will contribute to increase the availability of
generating units and also help reduce the negative environmental impacts of the plant such as reducing
atmospheric ash within the plant and its vicinity.
3.4.5 (B) Rehabilitation of Sub-Transmission and Distribution facilities – The rehabilitation of the
Sub- Transmission and Distribution system is essential for improving the reliability of electricity
supply to consumers in Zimbabwe. As elaborated under section 2.3.3 and 2.3.4, about 22,000
customers of the utility in various neighborhoods all over the country are without electricity as a result
of vandalism of some 1,400 distribution transformers scattered within the network. Also vandalized are
other network elements like transmission line towers and overhead distribution cables. These network
elements need to be replaced while measures are adopted by the utility to check future vandalism.
Activities included in this component are:
SUB-TRANSMISSION SYSTEM REINFORCEMENT: This comprises the installation of six
transformers and replacement of sixteen (16) faulty circuit breakers (16x132kV breakers) at various
sub-transmission substations. A new transformer will also be installed to boost power supply to the
Harare city water treatment plant to augment the reliability of water supply to the city.
DISTRIBUTION SYSTEM REINFORCEMENT: In the distribution network between 800 and 900
33/0.4kV distribution transformers and the same quantity of 11/0.4kV distribution transformers will
be procured and installed. The replacements have been necessitated by the large number of
distribution transformers that were vandalised during the peak of the economic crises in Zimbabwe.
Transformer oil was drained from a number of transformers resulting in damage to the
transformers. Additionally, about 460 km of 11kV and 33 kV Underground Cables as well as
Aluminium Conductors Steel Reinforced (ACSR) and & HAD overhead conductors will be
installed. The reinforcement of the distribution system will restore supply services to some of the
22,000 existing customers who are currently in darkness dues to vandalism of distribution
infrastructure.
3.4.6 (C) Environmental Consultancy: - Consultancy will be procured to carry out an Environmental
and Social Audit of the whole Hwange power plant and its operations and a comprehensive
Environmental and Social Management Plan prepared for the plant.
3.4.7 (D) Consultancies for Supervision - This component includes a consultancy for the supervision
of works at HPS and the T&D system.
3.4.8 (E) Consultancy for Project accounts auditing
9
3.5 Technical solution retained and other alternatives explored
3.5.1 An alternative solution that was explored was to apply all the Zim-Fund resources available for
the Power sector to interventions in the electricity Transmission, Sub-transmission and Distribution
networks. This alternative presented some attractions such as the opportunity to rehabilitate the 330 kV
transmission level substations at Warren and Chertsey by the installation of two transformers at these
stations as well as replacement of seven (330kV) circuit breakers at these and other high voltage
stations. Additionally, this alternative would have provided for the replacement of obsolete and
malfunctioning system protection and communication equipment in the grid such as protection relays
and remote terminal units that could contribute greatly to system stability and reliability. This
alternative would have limited the Zim-Fund interventions to only the Transmission and Distribution
System and allowed for easier project management and measurement of impacts. However, this
alternative was rejected because of concerns that had been expressed at project inception about ash
handling at the Hwange Power Station, particularly about the Ash dam whose safety was called into
question at the time and was said to pose some health hazards to the communities at the plant. It was
therefore considered expedient to include some interventions in the Ash handling at HPS, hence this
alternative was rejected.
3.5.2 A second alternative which included the provision of environmental monitoring equipment and
training of environmental monitoring staff at HPS, ZESA and the Zimbabwean environmental
management agency EMA could not be pursued purely for reasons of resource limitation. This
alternative aimed at addressing air pollution at HPS by providing proper monitoring equipment and
training. At project inception, air pollution resulting mainly from oxides of Sulphur, Nitrogen and
Carbon as well as Mercury and dust emitted from the stacks during the combustion of coal, was
identified as posing health hazards to local ecosystems, wildlife, workers and the surrounding
populations. This alternative was also shelved with the hope that it can be re-visited when additional
funds are made available for power sector interventions.
3.5.3 The technical solution adopted partially addresses environmental concerns at HPS by
generating a comprehensive ESMP which will provide the guidelines for any future environmental
management at HPS. A well-functioning Ash plant at HPS will also improve plant availability and
therefore power availability for the consuming public. This solution further addresses some of the
bottlenecks in the transmission and distribution networks that will allow industrial, commercial and
domestic customers to have access to electricity once supply is made available. It is hoped that,
ongoing rehabilitation works being implemented by the Government and ZESA will progress as
scheduled and deliver the expected outcome of increased power supply, which will allow a reduction in
the power curtailment exercise and help industries to resume operating at their full capacities and
thereby boost economic growth. Furthermore, it is expected that ongoing interventions at the ash dam
being funded by Government will be completed to address the environmental, health and safety
concerns identified at project inception.
3.6 Project cost and financing arrangements
3.6.1 The total cost of the Emergency Power Infrastructure Rehabilitation Project (EPIRP) is
estimated at USD 35.00 million (UA 22.727 million) net of taxes and duties, and excluding the cost of
procurement services which will be financed separately through the Fragile States Facility (FSF). The
total project cost is based on recent prices obtained from suppliers during similar maintenance
activities. Table 2 summarises aggregate costs of the various project components described under
section 3.4 while detailed cost break down is provided in Annex II.
10
Table 2a: - Project Cost by Component (USD million)
Table 2b: Project Cost by Category of Expenditure (USD million)
3.6.2 The project will be fully financed from the Zim-Fund. The tentative financing plan is
summarized in Table 3 below while details are given in Annex IV.
Table 3: - Financing Plan by Component (USD million)
3.6.3 Table 3 indicates that, Zim-Fund resources will mainly finance rehabilitation of the Ash Plant at
the HPS at a cost of USD14.870 million and the rehabilitation of the sub-transmission and distribution
networks at an additional cost of USD 14.960 bringing the total expenditure on works to USD 29.83
million. A further USD5.17 million will be required for services that include consultancies for
environmental and social audits, engineering supervision and project accounts auditing as well as the
purchase of environmental monitoring equipment and capacity building.
3.7 Financial Performance
3.7.1 ZESA Holdings’ operating environment for the year ended 31 December 2009 improved
significantly from that obtaining in 2008 mainly because of the introduction of a multicurrency system
which saw inflation tumbling and many economic and business variables stabilising. However as the
year progressed new challenges crept in, the major one being liquidity problems that seriously inhibited
ZIMFUND Total
A. Rehabilitation of Ash Plant at Hwange Power Station 14.870 14.870
B. Sub-Transmission & Distribution reinforcement 14.960 14.960
C. Consultancy for Environmental and Social Audit 1.200 1.200
D. Consultancy for Project Supervision 1.500 1.500
E. Consultancy for Project Accounts Audit 0.070 0.070
F Environmental Monitoring and Capacity Building 2.400 2.400
Total 35.000 35.000
Category of Expenditure (USD million) (UA million)
A. Works 32.13 20.863
B. Services 2.87 1.864
C. Miscellaneous 0.000 0.000
Total 35.000 22.727
ZIMFUND (UA million)
Rehabilitation of Ash Plant at Hwange Power Station 14.870 9.656
Sub-Transmission & Distribution reinforcement 14.960 9.714
Consultancy for Environmental and Social Audit 1.200 0.779
Consultancy for Project Supervision 1.500 0.974
Consultancy for Project Accounts Audit 0.070 0.045
Environmental Monitoring and Capacity Building 2.400 1.558
Total 35.000 22.727
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economic activity. The group adopted the United States Dollar (USD) as its functional currency with
effect from 1st February 2009. Year on year inflation rose to about 231,000,000% in July 2008 after
which compilations were suspended, but tumbled to an average of 7.9% in 2009 as availability of
goods improved mostly through imports. This brought about stability in planning and operations of the
Group.
3.7.2 Tariffs were adjusted to 7.53 USc/kWh from almost zero in USD terms after February 2009,
resulting in defaults on the part of many customers who found the new rates too high due to a
combination of the global financial crisis and liquidity challenges in the local economy. This
negatively impacted the Group’s liquidity position. However, the rollout of a prepayment meter
program in 2010 helped the utility to earn revenues of about USD 40 million per month as compared to
USD 6 million earned in previous months. As at 30 September 2010, total loans on ZESA’s books
amounted to US $426.6 million, comprising 72% foreign debt of USD309.1 million and 28% local
debt of USD117.5 million Out of the total loan amount, 93% or USD 395.1 million constitute the
current portion, which represents loan capital repayments falling due within twelve months.
Table 4: FINANCIAL INDICATORS 2010
Profitability Ratios
Return on Sales
Historical Cost
12.13%
Return on Sales 12.13%
Return on Total Assets 4.83%
Return on Capital Employed 4.09%
Acid Test Ratio 0.33: 1
Debtors Collection Period 287 Days
3.7.3 Profitability Ratios: The Return on Sales recorded a positive 12.13%. This shows a favorable
rate of return on sales. However it should be noted that the operating expenditure level is suppressed
due to cash flow constraints.
The Return on Total Assets is a positive 4.83%. This ratio reflects a favorable return on the use of the
group’s assets. However it should be noted that some of the group’s operational assets are due for
replacement.
The Return on Capital Employed is a favorable 4.09%. This ratio shows a fair rate of return on capital.
However the capital is mainly made up of a Non Distributable Reserve which resulted from
dollarization. There is need to enhance the share capital.
3.7.5 Liquidity Ratios: The Group has an unfavorable liquidity position clearly shown by a current
ratio of 0.44:1 and an acid test ratio of 0.33:1. The ratios are well below the recommended standard
ratios of 2:1 (current ratio), and 1:1 (acid test ratio). The Group’s Debtor’s Collection Period is 287
days. This indicates that whilst making a profit as shown in the above ratios and results, the cash flow
position is strained due to the delay in settling of accounts by customers.
3.8 Environmental and Social Impacts
3.8.1 Project Environmental Classification. The envisaged project is situated in Hwange district
which is predominantly a mining district and has, in addition to Hwange Power Station, Southern
Mining Coke Plant, Hwange Coal Gasification Plant, and Hwange Colliery. The project is likely to
induce positive environmental and social impacts, but as a coal-fired power plant, it induces significant
adverse environmental and social impacts. At commissioning in the 80s, the HPS had no legal
requirement for a full environmental and social impact assessment (ESIA). Never-the-less, the
12
Zimbabwe Environmental Management Agency (EMA) obliged Hwange Power Station, under the new
law to prepare an Environmental and Social Management Plan (ESMP) in lieu of a full ESIA. The
Bank reviewed this ESMP and given the current situation and the planned rehabilitation to be
conducted under this project, which to a larger extent would be positive to environmental and social
impacts, the project has been classified as Category 2 as per AfDB policies and guidelines stipulated in
the Environmental and Social Assessment Procedures (ESAP) (See Annex VIII for detailed analysis). It
is however clear that given the condition of the equipment; the Plant has failed to fully comply with
environmental measures stipulated by the EMA; hence a revised/re-designed ESMP has been prepared
to comply with both national requirements and AfDB policies and EMA requirements. The Executive
Summary of the revised ESMP was posted on the Bank’s website on 16 February, 2011.
3.8.2 Environmental Impacts and Mitigation Measures. The project activities will mainly
comprise repairs and replacement of existing equipment and limited civil works. This will have
minimum negative impacts on the local environment with waste and sludge management and disposal
being the significant source of impacts. The ESMP will clearly elucidate the measures to be taken to
protect the environment including observing proper working methods, replacement of destroyed
vegetation, ensuring proper disposal of discarded equipment and materials that may contaminate the
soil and ground water; prevention of nuisance in terms of dust, noise, odour, etc. The project provides
protective clothing for personnel engaged in the laying or cleaning of sludge / sewers and will also look
at fencing and/or covering some of the infrastructure which poses a great danger to humans such as
open manholes and ponds. The project will also provide air quality monitoring equipment and
electrostatic precipitators for the power plant. Among positive outcomes, the project is proposed to
remedy and mitigate a number of impacts due to lack of maintenance of the Hwange power plant. Such
works shall result in (i) significant reduction in air pollutants; (ii) significant improvement to the coal
handling and disposal system; (iii) significant improvement and safety considerations for the Ash Dam
and Ash Dam area; (iv) significant development of capacity building; and (v) significant enhancement
of the environment and health protection of workers and people residing in the surrounding areas.
3.8.3 Environmental and Social Audit. The Bank's environmental guidelines, stipulate that when
involved in financing a retrofitting or expansion project for an existing power generation or industrial
facility with significant social and environmental consequences, an Environmental and Social Audit
should be conducted which will objectively evaluate and obtain comprehensive information on the
sources, causes and impacts on the environment through a systematic, independent and documented
process. The project has, therefore, included in its design, carrying out such as an audit utilizing the
criteria developed in an ESMP against which to evaluate project compliance. The ESMP will also
provide a management and monitoring tool for environmental and social aspects during project
supervision and implementation; and provide information about any past or present impacts resulting
from the project that were not so far anticipated. A provisional sum has been included in the project
cost for the consultants to carry out the audit estimated at US$2 million (Abridged TORs are provided
in Annex VII).
3.8.4 Climate Change. The project supports a coal-fired plant with a technology that results in
production of most Green House Gases (GHG) such as CO2 emissions. However, modifications which
the project targets through refurbishment and rehabilitation will lead to a specific reduction of CO2
emissions. In other words, the reduction of emissions volume per unit of power generated. Although
modifications will lead to environmental improvements, they will also lead to increased availability,
meaning higher coal fuel consumption and an absolute increase of the CO2 emissions. The specific
reduction of emissions however, is considered a key enhancement for the existing technology that
complies with the Bank's policies in promoting sustainable development. Reduction in duration of load
shedding and subsequent reduction in usage of inefficient alternative fuels like firewood, liquefied
13
petroleum gas, diesel generators, petrol generators and paraffin will be beneficial to the country as a
whole. This will cut production costs, carbon emissions and improve on efficient utilization of fuel.
3.8.5 Frequent power outages encourage households, especially urban households, to use fire wood
for cooking. This has led to deforestation around urban centres with obvious tree loss in the surrounds
of Harare. Such tree loss has led to loss of carbon sinks. Attempt to replant these trees will not achieve
results till urban households have access to a reliable and affordable electricity supply. Households and
other electricity users also rely on diesel generators which yield higher carbon emissions than the grid
in Zimbabwe given that the grid is mixed hydro and coal fired thermal. Equipment that will be
refurbished or replaced will lead to increased energy efficiency which in turn yields lower carbon
emissions. The electrostatic precipitators will also reduce the emissions of SOx & NOx and particulate
emissions, effectively mitigating environmental impacts. Frequent power plant outages at Hwange lead
to increased fuel use for plant start-up (12-16 hours of diesel consumption for start-up and coal
consumption for heating up steam boilers before generation of electricity). Increased reliability of
Hwange Power Station would reduce cold starts and therefore lead to lower fuel use intensity and
carbon emissions.
3.8.6 Gender: The project is not envisaged to have any gender related negative impacts, on the
contrary it will result in improvements that will benefit both men and women at project level and wider
context. At national level, Zimbabwe has set out priorities for gender mainstreaming and empowerment
of women for the period 2008-2012. The National Gender Policy Implementation Strategy and Work
Plan seek to operationalize the commitments to gender equality and women's empowerment. Both
ZESA and ZPC have developed gender consciousness and appointed gender focal points to ensure that
interests of both men and women are taken on board in policy formulation and decision making.
3.8.7 During project implementation, however, women may disproportionately be exposed to the
spread of HIV/AIDS. The sub-contractors to carry out the rehabilitation works are likely to bring in
labor from distant places such as Harare, most likely men without families. The national HIV/AIDS
prevalence rate is at 13.6% but biased towards women4 who are subjected directly by men who tend to
lure girls into unprotected sex, and also to wives who become the victims on the receiving end when
husbands return home infected. The HIV/AIDS Policy of ZPC promotes practices that unite families in
order to reduce the spread of disease and mitigate its effect on the affected individual and his/her
family by creating a supportive environment.
3.8.8 Women’s Employment Opportunities. Currently the Hwange Power Station on average
employs 724 people on regular jobs among which 81 (11%) are women mostly in semi- and unskilled
jobs. While this outcome is as a result of the nature of jobs and remoteness of the site, ZPC is making
an effort to encourage more women to seek non-traditional jobs and take advantage of existing
vacancies which stand at 8% within Hwange Power Station itself. Zimbabwe being a member of SADC
is expected to implement the Gender Protocol which demands that women participation in the job
market should be at par with that of their male counterparts. A Gender Focal point has been appointed
at ZPC headquarters whose job among others is to ensure gender equity in recruitment. The project
will, in addition, ensure that the environmental monitoring training includes 50% women. In the
broader context, women have been impacted by lack of reliable power supply through job losses. Most
women are employed in horticultural and farming industries which have been significantly negatively
impacted.
4 According to Zimbabwe National EPP-Spectrum Estimates, 2009, out of the national prevalence rate of 13.6%, women
represented 60% of it and women at ages between 15-24 represented 77% of the prevalence.
14
3.8.9 Impact on Domestic Power Needs. An important aspect to be recognized is that women and
girls have suffered most due to lack of reliable electricity at household level. Traditionally, it is the
responsibility of women and girls to fetch water hence effects on water supply caused by lack of
electricity has put a burden on women and girls who have to stand for long hours queuing for water, or
may have to walk long distances in search of alternative sources of water. Therefore, the rehabilitation
project will stand to alleviate the suffering of women and girls and improve their well being. Similarly,
lack of electricity especially in urban areas impacted on women who have had to switch sources of
energy for lighting and cooking to charcoal or wood. This has had negative impacts on women and
girls who have to go fetching wood or charcoal and also who have to endure hazardous kitchen smoke
during preparation of meals. In both instances, women and girls will benefit from time and labor
savings from either queuing or walking for long periods.
3.8.10 Social: The rehabilitation project is likely to bring in direct and indirect; short-term and long-
term benefits to the communities around the project area and to the economy and population as a whole
While the rehabilitation project will impact the surrounding population of Hwange District, it should be
noted that the main project related outcomes and target population will be much wider. The social
services such as water and health have also suffered from the insufficient power generation and supply.
The rehabilitation project will improve availability and reliability of power; improve service provision
by municipalities especially in the area of water supply and health services delivery through reliable
supply of power to water pumping stations.
During implementation and operation, communities shall benefit directly through job creation.
Zimbabwe’s unemployment rate was at 90% (under-employed and disguised) in 2010. Currently HPS
employs 724 people with a vacancy level of 56 against the establishment. During implementation
additional people may be employed on short term basis. Most of these will be in skilled and semi-
skilled jobs.
3.8.11 Workers Health and Safety: Given the nature of work and environment, the workers may be
exposed to safety and health hazard associated with coal power plants and exposure to sharp objects
and to air and water pollution. Just like is the case for the regular staff of Hwange Power Station, the
sub-contractors will be expected to adhere to safety and occupational health and environment
management policy of ZPC; and adherence to Risk Management Policies of ZESA. Compliance to the
set principles shall become an integral part of special clauses in sub-contractor’s contracts.
3.8.12 Communicable Diseases: Exposure to HIV/AIDS and malaria are most critical. The
HIV/AIDS prevalence rate is estimated at 13.6% at national level with most rural areas having slightly
above average rates, The risk of contracting the disease is minimized by the on-going HIV/AIDS
awareness and prevention programs guided by both ZESA and ZPC’s Policies. The risk however, rests
more on the sub-contractors who will bring in labour from outside Hwange area. To minimize the risk,
the subcontractors will be obliged to incorporate ZPC guidelines on HIV/AIDS awareness, prevention
and mitigation measures. In addition, the sub-contractors will collaborate with district level National
Aids Council to ensure parallel and long-term programs complementing these efforts are national and
local level activities funded by agencies such as DIFD, USAID, Global Fund, and programs like “Local
AIDS Control Efforts (PLACE), etc., which focus on communities including school going girls and sex
workers. Regarding malaria and other water borne diseases, the project interventions especially in the
ash dam and other drainage related activities will assist in eliminating any stagnant water.
3.8.13 Outbreaks of Cholera and other waterborne diseases: The lack of/or unreliability of power
supply has affected the water sector with catastrophic consequences on health and hygienic practices.
15
Following the Cholera epidemic of 2008/09, there is new evidence that the risk is emerging due to
regular interruptions of electricity power supply to the water utilities leading to low volumes of water
production with increased production costs.5 The project will offer the opportunities of uninterrupted
water supply to water treatment works to ensure sufficient water is pumped and supplied to areas most
needed such as highly populated and vulnerable urban areas and growth centers.
3.8.14 Involuntary Resettlement: Given the nature of the project which has been under operation
since mid 80s, there are no people directly affected who may need to be displaced or compensated.
However, an ESMP has been prepared which spells out other environmental and social concerns of the
project and its operations. (Annex VIII.1: ESMP Summary)
4. PROJECT IMPLEMENTATION
4.1 Implementation Arrangements
4.1.1 The beneficiaries of the grant will be the two ZESA subsidiary companies ZPC and ZETDC.
The two companies will benefit from the financing in accordance with the highly prioritized needs as
already indicated in the project components.
4.1.2 Procurement services will be provided by an experienced PA appointed for the Zim-Fund
financed projects. The PA will be delegated by the GOZ to carry out procurement functions including
but not limited to the procurement of (i) Goods and Works and (ii) Environmental consultant for the
Audit of HPS (iii) signing of contracts and processing of invoices for payments following certification
by the Implementing Entity. The PA will be based off-shore.
4.1.3 An independent Project Implementation Entity (PIE) will be responsible for detailed project
design, implementation coordination and monitoring. The PIE will be assisted by Project Management
Teams (PMTs) that will be set up within ZPC and ZETDC for the Hwange and T&D rehabilitations
respectively to take responsibility of the day-to-day project implementation activities. The PIE shall
have expertise in power systems, preferably in thermal power, T&D, proven capacity, reputation and
documented financial standing as well as knowledge of Zimbabwe. The PMTs shall also have the
requisite knowledge and expertise in coal-fired plant operations and maintenance, T&D system
operations and maintenance and project management. CVs for these teams have already been submitted
to the appraisal team for the Bank's review and recommendation for approval or otherwise. (See Annex
VI for CVs for PMTs).
4.1.4 The PIE shall prepare the scope of works specifications and bills of quantities in addition to any
related technical input required for the preparation of project tender documents and assist the PA in the
preparation of tender documents as well as evaluation of bids for works contracts. The PIE shall also be
responsible for all project record keeping and reporting of the project activities to the PA, the Zim-
Fund and the GOZ. It shall be a liaison between the PA, the Zim-Fund and ZESA as well as
government institutions within the power sector and address all issues pertaining to the project
implementation with assistance from the PMT's.
4.1.5 Implementation of environmental and social mitigation measures through implementation of the
ESMP is the responsibility of the Hwange Power Station Environmental Unit. However, it is expected
that ZESA will beef up the capacity in terms of human resources, equipment and training to ensure full
implementation of the ESMP.
5 Zimbabwe experienced worst Cholera outbreaks in 2008/09 which resulted in 98,531 cases and left 4,282 dead by June
2009.
16
4.1.6 A Project Steering Committee comprising one representative each from ZESA Holdings and its
subsidiaries, one representative each from the Ministries of Energy and Finance and the Zim-Fund shall
be constituted with a member the PIE in attendance. The Committee will, as appropriate, address all
major issues arising, and provide overall guidance during project implementation. ZESA as the lead
beneficiary institution will ensure that there is coordinated support for the project implementation from
the government side at all times.
4.1.7 Project Audit: An independent Audit firm shall be recruited to carry out both technical and
financial audit of the project as implemented.
4.1.8 Environmental Audit Consultancy: An environmental consultant will be hired to carry out a
thorough and comprehensive environmental impact assessment of the Hwange plant to be conducted
whilst project implementation is underway. An environmental management plan will be prepared at the
end of this exercise.
4.2 Implementation Schedule
4.2.1 The project will be implemented over a period of 21 months. The key milestones will be the
recruitment of the PA and commencement of the works, respectively scheduled for Mid-March 2011
and November 2011. It is anticipated that, , beginning from April 2011 a period of about 3 months will
be needed for the selection of the Implementing Entity and a further 5 months for the preparation,
issuance and evaluation of tenders. By late November 2011 contracts for the various project
components should have been signed to signal the commencement of works. Project completion is
slated for end of December 2012. A tentative implementation schedule detailing the Procurement plan
is given in Annex V of this report.
4.3 Procurement Arrangements
4.3.1 An experienced Procurement Agency will be engaged to take overall project procurement
responsibilities. The procurement of Goods, Works and Services under the project will be in
accordance with the Bank’s Rules and Procedures for the Procurement of Goods and Works as well as
the Bank’s Rules for the Use of Consultant and as elaborated in the Operational Manual of the Zim-
Fund. The works which will be carried out in two contract packages shall include (1) Works for the
rehabilitation of the Ash Plant Hwange thermal power plant, and (2) Sub- Transmission and
Distribution System Rehabilitation. These will be procured through international competitive bidding,
of prequalified contractors. The recruitment of the Implementing Entity for engineering supervision
will be done based on a short list with Quality and Cost Based Selection (QCBS) method. The
procurement of the Environmental Consultant will be done based on a short list with Quality and Cost
based Selection (QCBS) method The Auditing Firm will be procured based on a short list and the
selection method will be Least Cost Selection (LCS). Details of the procurement arrangements are
provided in Annex VI.
4.4 Disbursement Arrangements and Financial Management
4.4.1 Payment for all services and works will be made by direct disbursement to the service providers
and contractors. The PIE will maintain separate accounts for the Project clearly showing all the
required financial details, including expenditures by component, category and financing source. The
PIE will be responsible for preparation and submission of disbursement applications through the PA to
the Zim-Fund. An allocation has been made in the cost of the project to cover the cost of the external
auditing services. The PIE shall provide all financial statements as well as technical reports to the
17
Auditors. Certified copies of audited accounts will be submitted to all project stakeholders once
completed.
4.5 Monitoring and Evaluation
4.5.1 The PIE with assistance from ZESA’s internal PMT's will be responsible for the overall
monitoring and evaluation of the project activities. The PIE will produce monthly progress reports on
the status of the various project activities, financial and procurement status, asset management,
safeguard and risks mitigation measures. Once substantial completion of the project is achieved, the
Implementing Entity shall prepare a project completion report providing all accounts of the project
implementation, financial, procurement, asset, safeguard and measures of the achievements of the
project against the indicators in the log frame. The report shall also provide lessons for future
operations. The project will be audited annually.
4.5.2 Monitoring of ESMP implementation and adherence to prescribed mitigation measures is the
responsibility of the Chief Environmental Planner at ZESA who should be a member of the PMT. The
Environmental Management Agency (EMA) also plays a part in inspecting and monitoring compliance
with the environmental laws. It has been observed, however, that HPS needs advanced monitoring
equipment and associated training at all levels (HPS, ZESA and EMA)
5. PROJECT JUSTIFICATION, SUSTAINABILITY & RISK MANAGEMENT
5.1 Economic Justification
5.1.1 Boost to Economic Activities: The restoration of power generation and improvements in
transmission and distribution networks will contribute to re-invigorate the country’s economic
performance. Load shedding as a result of Power shortages has mostly affected manufacturing
industries (which shrunk by 2% in 2009), agriculture, mining, and services. As elaborated under Annex
VII, energy consumption for industry for example dropped from an average of 3 579 GWh for the years
1995 – 2006 to the current 1,400GWh, suppressing industrial production levels and contributing to the
economic meltdown. It is estimated that industrial performance has dropped to less than 40% of it 2006
level resulting in large numbers of jobs losses. Improvements in electricity supply availability and
reliability will contribute to a recovery in the industrial sector. Similarly energy consumption in the
mining sector dropped from an average of 1 500GWh for 1995-2006 to 809 GWh in 2009 largely due
to previous economic hardships in the sector compounded by erratic power supplies. In the short-to-
medium term, envisaged improvements in supply reliability from Hwange coupled with increased
imports will contribute to recovery in the mining sector as demand for energy from the sector rises.
5.1.2 The agricultural sector is one of the largest employers in the economy and contributes
approximately 19% to GDP. The sector is one of the most adversely affected by power shortages.
Energy consumption in the sector also dropped from an average of 1 125GWh in 2005 to the current
599GWh, partly due to policy issues associated with land ownership and reduced power availability
and reliability. It is expected that by 2015 new mechanisms would have been put in place to boost
agricultural productivity and food security. In the short to medium term however, improved supply
reliability of supply enable farmers expand irrigation schemes as well as operate agro-machinery and
boost production.
5.1.3 A recovery in the industrial, mining and agricultural sectors will create jobs and contribute to
poverty alleviation. In 2004, 68% of the population was estimated to be living below the poverty line.
Improvements in the T&D network would enable the restoration of supply services to about 22,000
18
existing customers and households who are currently without electricity and allow small to medium
scale enterprises to resume operations by 2012.
5.1.4 Technical Losses: the current state of disrepair of the transmission and distribution system has
resulted in increased total losses. Total losses as at 2009 stood at 15.1% of total energy sales, with 12%
constituting distribution losses and 3.1% being transmission losses. The proposed T&D network
rehabilitation will help reduce such losses, to 2006 levels of 11.3% comprising 8.9% in distribution
losses and 3.8% in transmission losses, thus improving efficiency in the whole system.
5.2 Sustainability
5.2.1 The Ministry of Energy and Power, ZESA Holdings, and ZPC are doing their utmost to prevent
Hwange power plant from total collapse. The staff at the plant demonstrated technical skill and
innovation in maintaining and keeping the plant running under difficult circumstances. The appraisal
team was convinced that ZPC and the technical staff at the plant have sufficient skills and experience to
implement the rehabilitation program and upgrade the plant output and reliability to the desired level.
Both the IG and ZESA have showed their commitment to sustainability through allocating budgets to
the rehabilitation of HPS
5.2.2 ZETDC is also capable of implementing the rehabilitation project and maintaining the power
distribution facilities at the required reliability level. Existence of local transformer factories (namely
ZENT, a subsidiary of ZESA Holdings and South Wales Electric) is an added advantage as it is
providing means to have transformers replaced or maintained at short notice as the need arises.
5.3 Risk Management
5.3.1 High Debenture: ZESA’s debt is currently at about USD 400 million which results in an
average ratio of debt to equity of 3:4 which is considered high and represents a source of concern.
Capping the amount of additional debt that ZESA can obtain and improving their distribution,
metering, billing and collection systems are some of the mitigation measures.
5.3.2 Low Tariffs: Tariffs were extremely low prior to February 2009. The dollarization of the
economy in February 2009 enabled the company to charge a more cost reflective tariff and avoid the
extremely high inflationary effects on its working capital. However, the current tariff is still below the
required break-even levels. Bearing in mind the political and social implication of tariff policies, ZESA
is working on all fronts to sensitize all stakeholders about the importance of recovering its costs of
operations and ensure its continuity. ZESA is also exploring advanced “Targeted Tariffs policies” to
achieve a cross subsidy framework where the rich pay for the subsistence levels of the poor and where
tariffs change dynamically depending on the level and time of usage of electricity.
5.3.3 Commercial Losses: The sudden migration to the new tariffs met significant resistance
particularly from households who were used to monthly electricity bills below 1 USD and are now
asked to pay 20 times more. This resulted in non-payment of bill by many households subsequently
reducing ZESA revenue base. To address this problem, ZESA is investing in improvements to its
billing and monitoring systems and its collection efficiency. One example is the issuance of bills via
email and the opening of new banking halls to keep queuing to a minimum.
5.3.4 Another recent policy adopted by ZESA to address the growing accounts receivables and debt to
customers is the systematic disconnection of customers who are not or have not been paying their bills.
Albeit widely criticized, this drastic policy has had significant and immediate impact on ZESA cash
flows soaring from the tune of USD 6 million per month to about USD 46 million in monthly revenue
collected in cash since the implementation of this policy. Lastly, the utility has embarked on an ambitious
program to install prepayment meters for over 600,000 of its customers.
19
5.3.5 Technical Losses: the current state of disrepair of the distribution system causes enormous
distribution losses. The proposed distribution network rehabilitation will help reduce such losses, thus
improving efficiency in the whole system.
5.3.6 Vandalism: there is a risk of repetition of vandalism and other negative behaviors that caused the
deterioration of the system in the past to re-occur in the future. This is partially mitigated by the general
change in the political framework which promises improvements in general living conditions and will
help reduce incentives for vandalism in addition to extremely harsh legal actions against such behaviors
i.e. a person convicted of vandalism was sentenced to 30 years in prison which was highly publicized
and was intended to set an example in the community. The availability of diesel and fuel oil supply in
the country also reduces the incentives for people to steal transformer oil (which used to be drained and
used as fuel). In addition improvements in system reliability ensures that the T&D system is live most
of the time; a strong deterrent to would be vandals
5.3.7 Weakening of the Ash Dam: In addition to natural disasters, it was noted that the ash dam next
to the Hwange power plant has not been fenced adequately and may collapse should a heavy storm
strike the area and may inundate the whole plant. Fencing of the Ash Damn is required to address this
potential risk.
5.3.8 Lack of environmental mitigation and monitoring equipment. The HPS electrostatic precipitators
have not been replaced for a long time, hence are no longer effective, consequently significant
pollution is released into the environment. The installation of this equipment will reduce emissions and
the installation of air quality monitoring equipment will enable verification of the impact of this
intervention.
6. CONCLUSIONS AND RECOMMENDATIONS
6.1 Conclusions
6.1.1 Zimbabwe faces a number of Infrastructure challenges due to lack of resources for maintenance
and new investments. The rehabilitation of key power sector assets in the generation, transmission and
distribution systems has been identified as the fastest and least cost option for restoring generation
capacity to increase electricity supply in order to meet current demand and enhance system stability.
Since 2009 the IG has made resources available to the Electricity Utility - ZESA to address critical
needs at two important generation assets; the Hwange and Kariba Power Stations as well as
improvements of some transmission and distribution systems, but these are limited compared to the
level of resources required. The Bank administered Zim-Fund has been established by Donors to
provide additional resources required to assist the IG of Zimbabwe to continue with these emergency
rehabilitation works.
6.2 Recommendations
6.2.1 Considering the many socio-economic and environmental benefits of the Emergency Power
Infrastructure Rehabilitation project presented above, it is recommended that the Bank approves a grant
from the Zim-Fund not exceeding USD 35.00 million (UA 22.727) for the proposed project.
20
6.2.2 Conditions Precedent to:
A. Entry into Force of the Grant Protocol Agreement
(i) The Grant Agreement shall enter into force upon its signature;
B. Conditions Precedent to First Disbursement of the Grant:
ii) Provide evidence of having constituted a Project Steering Committee as recommended in
section 4.1.6
iii) Framework contract and specific project agreement signed between the Ministry of Finance and
the Procurement Agency to enable it to perform its duties on behalf of the Government of
Zimbabwe. Policies and guidelines of the Bank will be applied.
C. Other Conditions associated with Bank’s intervention
(i) Creation of an Environmental Management Unit (EMU) at Hwange Power Station and its
staffing
(ii) Report, on a quarterly basis and in a form acceptable to the Fund, on the status of
implementation of the re-designed ESMP in accordance with EMA and AfDB policies and
guidelines.
TECHNICAL ANNEXES
1
Annex I - Map of the Country and Location of the Project Areas
2
Annex II: Project Cost Estimate: Emergency Power Infrastructure Rehabilitation Project
No. COMPONENT
NAME COMPONENT DETAIL
Funding Required
ZIM-FUND (USD)
Hwange Power Station:
1 Ash Plant Purchase and install 4 new clink grinders 1,800,000
Purchase 3 new ash slurry pumps, 2 casings & spares to overhaul
2 pumps
1,600,000
Replace all 4 discharges lines 4,500,000
Replace 500m 11kV cable & replace failed transformer cables 500,000
Purchase 5 new ash pump motors and bearings to overhaul 4 2,000,000
Purchase 4 new sluicing water pumps complete with motors, 3
casings and spares to overhaul 2 pumps
1,200,000
Purchase bearings and overhaul 6 sluicing pump motors 300,000
Purchase 2 new booster pumps, 2 casings & spares to overhaul 2 900,000
Purchase 1 new fluid coupling and spares to overhaul 1 250,000
Purchase 5 new sealing water pumps & motors 750,000
Purchase 3 new beilge pumps & motors 400,000
Purchase 2 new overflow sump pumps & motors 270,000
Purchase 500m 3.3kV 3 core and replace all damaged cables 400,000
Sub-total for Ash Plant at Hwange Power Station: 14,870,000
Transmission and Distribution System Reinforcement:
2 Sub-
Transmission
System
Reinforcement
132 kV SS
Install Urgently Needed Transformers at Six Substations 3,000,000
Install one (1) Transformer to augment Harare city water supply. 1,000,000
Replace sixteen (16) faulty sub-transmission breakers (16x132kV
breakers)
960,000
Sub-total for Sub-Transmission System reinforcement 4,960,000
3 Distribution
System
Reinforcement
Install 800-900 11/0.4kV Distribution Transformers 3,000,000
Install 800-900 33/0.4kV Distribution Transformers 2,000,000
Install 460.8 km of 11 7 33 kV Underground Cables 3,000,000
Install ACSR & HAD Overhead conductors. 2,000,000
Sub-total for Distribution System Reinforcement 10,000,000
Consultancies for Environmental, Supervision & Auditing
4 Environmental and Social Audit 1,200,000
Supervision - PIE 1,500,000
Auditing 70,000
Environmental Monitoring and Capacity Building 2,400,000
Sub-total for Environmental, Supervision & Auditing 5,170,000
Total Resource Requirements for Project as Appraised 35,000,000
3
Annex III: Zimbabwe: Overall Power Infrastructure Rehabilitation Exercise
PHASE 1
2011 PROPOSED ALLOCATION
No. COMPONENT
NAME COMPONENT DETAIL
Total
Funding
Required
ZESA
Resources Zim-Fund GOZ
Hwange Emergency Rehabilitation
1 Ash Plant Purchase and install 4 new clink grinders 1,800,000 1,800,000
Purchase 3 new ash slurry pumps, 2 casings &
spares to overhaul 2 pumps
1,600,000 1,600,000
Replace all 4 discharges lines 4,500,000 4,500,000
Replace 500m 11kV cable & replace failed
transformer cables
500,000 500,000
Purchase 5 new ash pump motors and
bearings to overhaul 4
2,000,000 2,000,000
Purchase 4 new sluicing water pumps
complete with motors, 3 casings and spares to
overhaul 2 pumps
1,200,000 1,200,000
Purchase bearings and overhaul 6 sluicing
pump motors
300,000 300,000
Purchase 2 new booster pumps, 2 casings &
spares to overhaul 2
900,000 900,000
Purchase 1 new fluid coupling and spares to
overhaul 1
250,000 250,000
Purchase 5 new sealing water pumps &
motors
750,000 750,000
Purchase 3 new beilge pumps & motors 400,000 400,000
Purchase 2 new overflow sump pumps &
motors
270,000 270,000
Purchase 500m 3.3kV 3 core and replace all
damaged cables
400,000 400,000
14,870,000 14,870,000
4
2 Stage 1
Excitation
Upgrade Units 1, 2, 3 & 4 excitation system 3,700,000 3,700,000
3 Turbine
Auxiliaries
Replace Stage II oil purifiers 3,000,000 3,000,000
Purchase and Install 3 extraction pumps
Replace DC lube oil pumps
4 Coal Plant Refurbish all coal plant structures 1,000,000 1,000,000
Refurbish dust suppression and dewatering
systems
1,550,000 1,550,000
Install a manual panel backup to PLC 250,000 250,000
Purchase 3 new coal weighers 800,000 800,000
Refurbish all protection systems 250,000 250,000
Purchase & install 5 new hold back units 500,000 500,000
Overhaul 4 tripper cars 400,000 400,000
Refurbish tripper panels & flap valves panels 200,000 200,000
Refurbish magnetic separation (5off) 400,000 400,000
Purchase & install 5 new fluid couplings 750,000 750,000
Purchase 4 new cable rell drums 280,000 280,000
Purchase & install new flap valves &
actuators
700,000 700,000
Purchase 3 vibratory feeders complete with
motors
2,700,000 2,700,000
Purchase & install 4 sump pumps in the
reclaim hoppers
400,000 400,000
Purchase spares & overhaul conveyor
gearboxes (13)
1,700,000 1,700,000
11,880,000 11,880,000
5 Boiler Plant Replace coal burners, diffusers and ceramic
line in PF
2,800,000 2,800,000
pipe work
5
Purchase fuel oil pumps and compressors 1,200,000 1,200,000
Replace Unit No. 6 economizer and platen
s/heater
2,500,000 2,500,000
elements
Replace 4 Stage I super heater safety valves 600,000 600,000
Replace Stage I Lockheed pumps & motors 1,600,000 1,600,000
Replace air heater tubes on units 1 and 2 300,000 300,000
Refurbish Stage II precipitators 450,000 450,000
Replace Stage II air heater baskets
Replace flaustal compensator seals on Stage I
units
300,000 300,000
9,750,000 5,750,000 4,000,000
6 Water Treatment
Plant
Refurbish switchgear and controls for water
transfer pumps
200,000 200,000
Replace portable water and degassed water
pumps and motors
400,000 400,000
Refurbish raw water and degassed water
pumps and motors
200,000 200,000
800,000 800,000
7 DEKA Pump
Station & Pipe
Line
Purchase and install 2 high lift pumps, 4 low
lift and 8 sump pumps & motors
2,900,000 2,900,000
Purchase spares and overhaul 4 HL pumps &
motors
800,000 800,000
Resuscitate portable water treatment plant 50,000 50,000
Desilt and reline vertical and horizontal joints
on high lift setting tank
65,000 65,000
Refurbish 11kV/380V LL transformers and
replace power cables
500,000 500,000
Purchase new switchgear and instrumentation
for LL & HL
390,000 390,000
Overhaul suction, discharge & non return
valves and replace actuators
650,000 650,000
6
5,355,000 65,000 5,290,000
8 Laboratory Purchase laboratory equipment and resuscitate
online analyzer equipment
1,100,000 1,100,000
9 Stage II Units 5 & 6 Major Overhaul Spares 20,000,000 20,000,000
10 Milling Plant Purchase Overhaul Spares for all Stage I& II
units
8,000,000 0
11 Draft Plant Purchase PA and ID fans impellors and
bearings
3,500,000 0
12 Auxiliary Plant Refurbish hydrogen and Chlorine plants 3,000,000 3,000,000
Refurbish Cooling water Systems
Purchase Spare Station & Generator
Transformer
13 Dirty Drains Replace Stage 1 & Stage II dirty drains
pumps & motors
1,500,000 1,500,000
Sub-Total for Hwange Emergency Rehabilitation : 86,455,000 25,915,000 14,870,000 45,670,000
Transmission and Distribution System Reinforcement
14 Customer
Metering
Prepayment Meters/Smart Meters 7,500,000 7,500,000
Test Benches (Harare - Bulawayo) 400,000 400,000
Three Phase Meters 1,000,000 1,000,000
Susbstations Indication Instruments 2,500,000 2,500,000
11,400,000 11,400,000
15 Sub-
Transmission
Install Urgently Needed Transformers at Six 3,000,000 3,000,000
7
System
reinforcement
Substations
132 kV SS Install one (1) Transformer to augment Harare
city water supply.
1,000,000 1,000,000
Replace sixteen (16) faulty sub-transmission
breakers (16x132kV breakers)
960,000 960,000
4,960,000 4,960,000
16 Transmission
System
Install one (1) 330/132/11 kV Tx at Chertsey
SS (1x90 MVA)
4,100,000 4,100,000
Reinforcement
(330 KV)
Install one (1) 330/132 kV Tx at Warren SS
(1x90 MVA accessories)
700,000 700,000
Replace faulted breakers at transmission
substations (7x330kV breakers)
700,000 700,000
5,500,000 5,500,000
17 Distribution
System
Reinforcement
Install 800-900 11/0.4kV Distribution
Transformers
3,000,000 3,000,000
Install 800-900 33/0.4kV Distribution
Transformers
2,000,000 2,000,000
Install 460.8 km of 11 7 33 kV Underground
Cables
3,000,000 3,000,000
Install ACSR & HAD Overhead conductors. 2,000,000 2,000,000
10,000,000 10,000,000
18 System
Protection and
Communications
Replace Obsolete RTUs on National Grid
SCADA
320,000
Replace Obsolete Substations Control
Systems (Kariba, Sherwood, Norton and
Marvel)
936,000
Replace Obsolete and Malfunctioning
National Grid Distance Protection Relays
(Over 30 Years Old and No Spares) at Kariba,
Alaska, Sherwood, Norton, Warren, Dema,
Bindura, Orange Grove, Haven, Chetsey and
Tokwe
640,000
8
Replace Backup Protection Equipment for the
Above Grid Substation
640,000
Replace Malfunctioning Telecommunication
Signal Carriers (Power line Carriers with
Optical Fibre on the National Grid) at
Songo - Bindura (161km) 805,000
Bindura - Dema (91.2km) 456,000
Alaska - Sherwood (156.6km) 783,000
Alaska - Kariba (169.4km) 847,000
Chetsey - Tokwe (130km) 650,000
Optical Fibre Multiplexes for the Above
Optic Fibre Links (10)
250,000
6,327,000
Sub-total for Transmission and Distribution System
Reinforcement:
38,187,000 17,727,000 14,960,000 5,500,000
19 Cost of ES Audit 1,200,000 0 1,200,000 0
20 Supervision 1,500,000 0 1,500,000 0
21 Auditing 70,000 0 70,000 0
22 Environmental Monitoring and Capacity Building 2,400,000 0 2,400,000 0
Grand Total Resource Requirements: Generation,
Transmission & Distribution
129,812,000 46,812,000 35,000,000 51,170,000
9
Annex IV Implementation Diagram
Certified Invoice
ADB / ZIM Fund
Zim Fund MMU
GOZ
Project Implementing Entity
(PIE) assisted by ZESA
constituted Project
Management Teams (PMTs).
Project coordination and
management services
Procurement Agent
Consultants/Contractors/suppliers
Nominal Grant recipient
Procurement approval
Contractual relation
Contractual relation
Delegation of implementation
Prj. Management
Payment
Disb. application
Project management and
supervision services
and Coordination
Implementation Arrangement Diagram
Payment
Project Steering Committee
10
Annex V – Procurement Arrangements
All procurement of goods and works and acquisition of consulting services financed by the Zim-Fund will be in
accordance with the Bank's Rules and Procedures for Procurement of Goods and Works or, as appropriate, Rules
and Procedures for the Use of Consultants as well as the Zim-Fund operations manual, using the relevant Bank
Standard Bidding Documents. A Procurement Agent will be responsible for the procurement of goods/works/
service contracts, consulting services, training and miscellaneous items as detailed below. A table of the
Procurement milestones is shown below, while the detailed Procurement Plan will be presented separately.
Summary of Procurement Arrangements
Categories
USD (million)
ICB Other Short List * Total
A. Works
A1 –Ash Plant rehab. Hwange
Thermal Power Station.
A2- Transmission & Distribution
rehab.
14.870
14.960
14.870
14.970
A.3 Environmental Monitoring
equipment
2.300 2.300
B. Services
B1. Engineering Supervision
services – Implementing Entity
1.500 1.500
B2. ESIA Audit and ESMP
production
1.200 1.200
B3. Accounts Audit Services 0.070 0.070
B.4. Environmental Monitoring
capacity
0.100 0.100
GRAND TOTAL 32.13 2.870 35.00
* Short List applies to the use of consulting services only.
_ other may be LIC, International or National Shopping, Direct Purchase or Force Account.
Electro-Mechanical Works
Procurement of Electromechanical Works associated with Ash Plant rehabilitation and T&D rehab works is
divided into two packages as shown above. (A1 for an amount of USD 14.870 million – Ash Plant and A2 for
an amount of USD 14.960 million – T&D). These will be carried out under International Competitive Bidding
procedures of prequalified contractors. An amount of USD2.4 million will be used to procure environmental
mitigation equipment. The contractors will be required to submit their bids as per specifications outlined in
tender documents.
Consulting Services
Procurement of the Implementing Entity - consulting firm for engineering supervision and monitoring will be
carried out by the MMU at a contract value not exceeding USD 1.500 million. Environmental auditing as well
as project accounts auditing will be carried out in two packages with total contracts values not exceeding USD
1.200 million for environmental and social audit services and USD 0.070 million for Project Accounts Audit.
The process for selections shall be through Short List and the method for evaluation is Quality and Cost Based
Selection (QCBS). The process for selection shall be through Short List and the method for evaluation is Quality and
11
Cost Based Selection (QCBS). Project Accounts Audit valued at USD 0.070 million shall be through a short list and the
process for evaluation shall be Least Cost Selection (LCS).
General Procurement Notice
The text of a General Procurement Notice (GPN) will be issued for publication in UN Development Business
online and on the Bank’s web site, upon approval of the Grant Proposal.
Review Procedures
The following documents are subject to review and approval by the Zim-Fund before promulgation: General
Procurement Notice, Specific Procurement Notices, Prequalification Documents [if applicable], Tender
Documents or Requests for Proposals from Consultants,Tender Evaluation Reports, including
recommendations for Contract Award (goods/works), or Reports on Evaluation of Consultants' Proposals, ,
Draft contracts (goods/works), if these have been amended and differ from the drafts included in the tender
documents, Reports on Evaluation of Consultants' Financial Proposals, including recommendations for
Contract award, minutes of negotiations and duly initialed contracts documents.
Post Review
Post review will not be applicable under this project. projects
Executing Agency
A Procurement Agent will be responsible for the procurement of goods/works/consulting services/training
services (as appropriate).
Procurement Plan
The Zim-Fund shall review the procurement arrangements proposed by the Procurement Agent in the
Procurement Plan for its conformity with the grant Agreement and its Rules. The Procurement Plan shall cover
an initial period of at least 21 months. The Plan will be updated on an annual basis or as needed always
covering the next 21 months period of project implementation. Any revisions proposed to the Procurement Plan
shall be furnished to the Zim-Fund for its prior approval.
12
Annex VI – Project Management Teams
TRANSMISSION AND DISTRIBUTION
Team Leader : ENGINEER IKHUPULENG DUBE
Team Member : MR. FREDY MAZANA
Team Member : ENGINEER BUKOSI SISO
GENERATION PROJECT TEAM:
Team Leader : ENGINEER PHILLIP MBENGERANWA
Team Member : MR MUYEDZO NEBARWE
Team Member : ENGINEER BENARD CHIZENGEYA
CURRICULUM VITAEs FOR TEAM MEMBERS:
CURRICULUM VITAE FOR ENGINEER BUKOSI SISO
Qualifications
Bachelor of Science Degree in Engineering
Masters in Business Administration
African Development Bank Tendering procurement Procedures Certificate
Years of Experiences : 25 years
Areas of Expertise
Distribution planning
Procurement of electrical materials and services
Standardization
Research and development
Regulatory compliance
CURRICULUM VITAE FOR MR FREDY MAZANA
Qualifications
Bachelor of Commerce Degree in Accounting
Years of Experiences: 14 years
13
Areas of Expertise
Financial Administration
Management of accounts payables and receivables
Procurement
Financial report
CURRICULUM VITAE FOR ENGINEER IKHUPULENG DUBE
Qualifications
Masters of Science Degree in Engineering
Years of Experiences: 21 years
Areas of Expertise
Project Management
System Studies
Designs and Specifications
Regulatory Compliance
Network Operations and Maintenance
Research and Development
Policy Studies and Analysis
CURRICULUM VITAE FOR ENGINEER PHILLIP MBENGERANWA
Qualifications
Bachelor of Science Degree in Engineering
Years of Experiences: 21 years
Areas of Expertise
Procurement
Power station operation
Power station Management
CURRICULUM VITAE FOR ENGINEER BENARD CHIZENGEYA
Qualifications
Bachelor of Science Degree in Engineering
Years of Experiences: 27 years
14
Areas of Expertise
Power station maintenance
Power station Operation
CURRICULUM VITAE FOR MUYEDZO NEBARWE
Qualifications
Management of Business Administration (Nottingham Trent UK)
Post Graduate Diploma Certificate (Nottingham Trent UK)
B. Comm (Hon) Accounting Midlands State University
B.Comm Cost and Management Accounting SAQA Part C CIS
ZAAT Diploma Certificate and Foundation Certificate
Years of Experiences: 12 years
Areas of Expertise
Financial Management Power Stations
Accounting Management Power Stations
15
Annex VII – ECONOMIC IMPACT ASSESSMENT
8.1 Economic Sectors Electricity Consumption Review
8.1.1 Mining Sector The sector resulted in only 809 GWh sales in 2009 compared to an average of
1,500GWh for the period 1995 to 2006 with a percentage drop of 46%. The main reason for this percentage
drop is system viability problems due to previous economic hardships compounded by erratic power supplies.
The demand for mining is expected to rise in the medium term due to envisaged improvement of supplies at
Hwange, increased imports (with mechanisms being put in place to allow miners to import power directly and
or restructuring of the import arrears debt), and more availability of power to the productive sector as a result of
the implementation of demand side management and energy efficiency programmes.
8.1.2 Industry Sector Industry is currently constrained and is operating below 60%. It has dropped in
terms of sales by over 50% from an average of 3 579 GWh for the years 1995- 2006, to the current 1,400GWh
which is 40% drop. It is estimated that 270 MW is currently out due to suppressed production levels as a result
of the economic meltdown. The problems of industry have been compounded by erratic supply. In the medium
and short term the growth in demand is expected from recovery of industry, which is closely linked to economic
policies that are in place to resuscitate industry.
8.1.3 Commercial Sector This is the only sector that has not shown any decline since major commercial
centres are usually exempted from load shedding. Commercial also affected by Rural Electrification since the
Rural Electrification Programme is targeted at schools, government offices, clinics and rural business centres.
8.1.4 Agricultural Sector Agriculture dropped from an average of 1125GWh registered in 2005 to the
current 599GWh. The main reasons for the decrease in energy consumption for the sector can be attributed to
lower energy usage by newly resettled farmers due to lack of funding for energy intensive farming activities,
unclear ownership of existing infrastructure and its maintenance and erratic power supplies for irrigation
activities. It is assumed by 2015 new mechanisms would have been put in place to boost agricultural
productivity and food security. In the short to medium term, a number of projects in Middle Sabi, Chisumbanje
and Mwenezi areas are lined up to produce ethanol from sugar cane. The energy requirements will be minimal
since the same projects will be implementing co-generation. The long term plans to construct dams such as
Tokwe-Mukosi, Biri -Manyame etc will result in increase in irrigation and power consumption.
8.1.5 Domestic Sector Domestic sales will remain subdued in the short and medium term because of lack
of large scale housing infrastructure currently taking place. Notable developments are electrifying houses
developed by individuals and investors estimated at 89,000 currently not connected. In the long term it is
assumed that as the economy recovers, housing infrastructure will be put in place to alleviate housing problems.
On the same note it is expected that the rural electrification project will result in a significant number of
households being connected. The number of urban connections will progressively increase from 5,000 per
annum in the short term rising to an average of 20,000 per annum in the medium to long term. Total
electrification in urban areas is expected to be achieved by 2025.In rural areas, the base case scenario assumes
that about 5,000 households will be connected in the short term and then the number of connections will rise to
10,000 per annum in the medium term and then rising to over 20,000 in the long term (after total electrification
of urban areas).
It is assumed that household incomes will be constrained hence lower connection rates. Also erratic electricity
supplies would mean that in the short term households will have to rely on other substitutes such as fuelwood,
standby generator, kerosene, batteries and candles. These energy forms are inferior to electricity, have indoor
16
pollution and are generally higher than the average monthly electricity bill of a household as shown on the table
below.
The projected Number of Customer Accounts with ZETDC is presented below:
2010 2015 2020 2025 2030
Estimated Population 13,424,400 14,604,936 15,889,287 17,354,574 20,452,742
Households
Urban 404,947 479,947 579,947 650,947 766,947
Rural 117,806 152,806 202,806 269,806 364,806
Sub-total 522,753 632,753 782,753 920,753 1,131,753
Commercial Establishments
Mining Industry 637 664 681 698 715
Other Industry 13,679 13,858 14,208 14,566 14,934
Sub-total 14,316 14,521 14,888 15,264 15,650
National and Local Government 3814 12814 21814 30814 39814
Other Accounts 46,609 47,786 48,993 50,230 51,498
Overall Average 587,492 707,874 868,448 1,017,061 1,238,715
Household Electrification Rate (%) 31.2 34.7 39.4 42.4 44.3
Growth In Accounts (% p.a) 4.8 3.8 4.3 3.0
Household Electrification Rate (%)
Urban Electrification rate (%) 80.4 87.6 97.3 100.0 100.0
Rural Electrification rate (%) 10.0 12.0 14.6 17.8 20.4
8.2 Energy Price Comparison (per customer) as at 30 April 2010
MONTHLY
USAGE AVERAGE UNIT
PRICE (US$)
MONTHLY COST
TO CUSTOMER
(US$)
MONTHLY
COST TO
ZESA (US$)
SUBSIDY
(US$)
COOKING AND 250 KWh 0.07 17.48 18.83 1.35
HEATING 30 Litres Paraffin 1.00 30.00 NIL
(2 MEALS PER 60 Bundles of Firewood 1.00 60.00 NIL
DAY) 6 Kg Gas 2.35 14.00 NIL
20 Kg Gel Fuel 2.08 41.50 NIL
LIGHTING 20 KWh 0.07 1.40 1.51 0.11
(3 ROOMS LIT 4
hrs/day) 40 Candles 400g 0.28 11.33 NIL
RADIO 12 KWh 0.07 0.84 0.90 0.06
(8 hrs/day) 4 Torch Cells 1.15 4.60 NIL
17
8.3 Energy Projections
The following tables shows the energy sales for each customer category, The total energy sales for each
scenario (low case, base case and high case), energy at bulk supply point, energy sent out and system maximum
demand.
Historical Sales and Forecast by Customer Category
MINING INDUSTRIAL COMMERCIAL FARMING DOMESTIC
ZESA
UNITS TOTAL
%
Growth
1995 1595 3780 1333 758 1672 23 9160 5.4
1996 1589 4003 1510 868 1832 19 9821 7.2
1997 1707 3848 1800 927 1991 21 10294 4.8
1998 1580 3532 1800 1123 2098 17 10150 -1.4
1999 1642 3961 1625 1304 2230 18 10780 6.2
2000 1429 3884 1540 1291 2316 34 10494 -2.7
2001 1346 3634 1548 1324 2349 25 10226 -5.1
2002 1443 3550 1493 1308 2487 38 10319 -1.7
2003 1426 3447 1451 1245 2728 71 10368 0.5
2004 1420 3121 1432 1197 2884 63 10116 -2.4
2005 1410 3233 1628 1303 2796 38 10408 2.8
2006 1379 2959 1838 846 3262 7 10307 -1.0
2007 10293 -0.1
2008 7476 -27.2
2009 802 1404 1631 599 2609 7 7052 -4.1
Forecast
2010 865 1685 1680 600 2687 8 7525 6.6
2011 908 1735 1730 618 2768 8 7768 3.2
2012 1017 2603 1782 643 2851 8 8904 14.6
2013 1058 2681 1818 668 2936 8 9170 3.0
2014 1143 3083 1872 695 3025 8 9826 7.2
2015 1234 3392 1947 723 3327 8 10631 8.2
2016 1333 3731 2025 795 3660 8 11552 8.7
2017 1439 4104 2106 875 4026 8 12558 8.7
2018 1555 4514 2190 962 4428 8 13658 8.8
2019 1679 4966 2278 1059 4871 8 14860 8.8
2020 1813 5214 2369 1164 5358 8 15927 7.2
2021 1958 5318 2464 1281 5626 8 16656 4.6
2022 2037 5425 2563 1409 5795 8 17236 3.5
2023 2118 5533 2665 1550 6027 8 17901 3.9
2024 2203 5644 2772 1705 6207 8 18539 3.6
2025 2291 5757 2883 1773 6394 8 19105 3.1
2026 2383 5872 2998 1844 6585 8 19690 3.1
2027 2478 5989 3118 1918 6783 8 20294 3.1
2028 2577 6109 3242 1994 6987 8 20917 3.1
2029 2680 6231 3372 2074 7196 8 21562 3.1
2030 2787 6356 3507 2157 7412 8 22227 3.1
ENERGY IN GWH
18
8.4 Economic Impact of the Emergency Power Infrastructure Rehabilitation Project
The proposed project is expected to have both direct and indirect economic impacts on various stakeholders; the
section below describes these impacts in more in-depth.
8.4.1 Direct Economic Impact due to the improvement of the ash plant: Ash plant rehabilitation will have
an immediate impact on the surrounding communities in terms of reduced infection rates of ash pollution
related diseases and associated averted costs to public health and to local households. In addition, the ash plant
improvement will result in less ground and water pollution hence an averted cost to the economy related to site
cleaning and restoration as well as cost accrued to various hindrances to agricultural and fishing activities.
8.4.2 Direct Economic Impact due to the reinforcement of the Transmission and Distribution networks:
transmission and distribution systems reinforcement will significantly improve the reliability of the power grid
and reduce the portion technical losses and assuring a stable constant supply of electricity to vital sectors of the
economy, particularly in the water sector which depends largely on power hungry water treatment plants. The
increased availability of the units will enable consistent supply of electricity to the economy.
8.4.3 Indirect Economic Impact: The restoration of power generation and improved distribution will re-
invigorate the country’s economic activities and boost industrial production and contribute towards poverty
alleviation which was estimated at 68% (2004) of the people living below the poverty line. Power shortages and
shedding have mostly affected manufacturing industries (which shrunk by 2% in 2009), agriculture, mining, and
services. It is estimated that due to the economic down-turn industrial performance has been at less than 40%.
Reduced productivity in these industries and sectors has meant large number of jobs lost. The agricultural sector
which contributes approximately 19% to GDP and employs over 400,000 people (66%) also has been adversely
affected by power shortages. It is, therefore, critical to restore power supply and distribution to optimal levels.
8.5 Conclusion: The proposed intervention will certainly contribute to the efforts currently undertaken by
the Government of Zimbabwe and ZESA to restore the power infrastructure in the country. Nevertheless, the
available funding risks reduce the impacts of this particular intervention as far as the optimization of the power
infrastructure in Zimbabwe is concerned given the long list of items required as depicted in Annex III. More
funding is required to ensure higher impacts
19
Annex VIII – ENVIROMENTAL AND SOCIAL ANALYSIS
8.1 Environment
Initial Environmental and Social Examination (IESE)
8.1.1 The examination conducted by the Bank Mission has revealed that lack of regular maintenance
according to specifications by equipment vendors and shortage of spare parts has resulted in degraded
performance with negative consequences on the environment. Urgent actions are needed to improve the
environmental performance of the power station and auxiliary plant systems. The rehabilitation measures
envisaged ranging from the power house, control systems, coal feeding system, precipitators, ash disposal,
water cooling and pumping system and testing and laboratory systems will address a very critical need given the
current state of the plant.
8.1.2 The electrostatic precipitator runs at around 40% of its full capacity, which means that about 60% of the
fly ash is being released into the atmosphere through the stacks. The power plant lacks essential cleaning
systems associated with coal fired power plants, e.g. desulphurization systems and de-noxing operations. Hence
large amounts of Sulphur Dioxide and Nitrogen Oxides are also released into the atmosphere annually without
any form of control measures. Among most significant environmental and social impacts are linked to the ash
disposal area and the entire ash disposal system, including the management of liquid effluents and the ash dam.
Associated with the ash are heavy metals which represent a real threat to humans, plants, animals and water
bodies in the vicinity of the plant (approximately 5 – 10 km radius).
8.1.3 Most critical of the items from environmental and social points of view are measures consistent with all
electronic and mechanical equipment that are in need of refurbishment and which, if installed, will directly
result in improved environmental and social conditions in the plant and its auxiliaries. These can be
summarized as follows:
(i) Rehabilitation of boilers to improve combustion
(ii) Refurbishment of electrostatic precipitators (ESP)
(iii) Refurbishment of the ash plant to ensure optimal operation that will minimize excessive ash being
sucked back into the ESP,
(iv) Remedial actions on ash slurry disposal system and management of the ash dam
8.1.4 Further investigations are needed to select de-noxing systems to be installed with the most appropriate
control instruments of NOx emissions in boiler operation. Desulphurization methodologies need to be studied to
select an effective methodology capable of decreasing SO2 emissions to the least possible limit and in
conformity, at the same time, with the available resources. These would include items such as scrubber system,
limestone and coal washing options.
Negative Project Impacts
8.1.5 The project activities will mainly comprise repairs and replacement of existing equipment and limited
civil works. This will have minimum negative impacts on the local environment with waste and sludge
management and disposal being the significant impact. The bid documents will clearly outline the measures to
be taken to protect the environment including observing proper working methods, replace any destroyed
20
vegetation, and protecting the surrounding areas by ensuring proper disposal of discarded equipment and
materials. The environmental and social management plan will entail how the upgrade should be undertaken
such that the sludge is not disposed of in a manner that will contaminate the soil and groundwater resources.
Included in the mitigation measures would be the prevention of nuisance in terms of dust, noise, odors etc. The
project provides protective clothing for personnel engaged in the laying or cleaning of sludge/ sewers and will
also look at fencing and/or covering some of the infrastructure which poses a great danger to humans such as
open manholes and ponds. The Agency responsible for project implementation will closely monitor the
execution to ensure that any negative impacts arising are mitigated as entailed in the ESMP.
Mitigation Measures
8.1.6 A strategy for dealing with the above-mentioned environmental and safety concerns would be built
around the following actions:
(i) An Air Quality Management Plan is required to deal with air pollution from the stack. Electrostatic
precipitators (de-sulphurisation equipment) are required and need to be installed. A management strategy for
disposal of all trapped substances is also needed to avoid further pollution of soil and water from substances like
mercury trapped by the precipitators. There is also a need to improve combustion efficiency within the plant to
reduce carbon monoxide and other gas emissions. (Concentration levels should not exceed 5 ppm for each of
the gases of concern: SO2, CO, and NO).
(ii) An Environmental Management Plan is required for the ash dam. The main issue is to prevent wind from
blowing away the ash at the dam. This can be addressed by keeping the entire ash under wet conditions.
Sprinklers need to be installed for continuous spraying of the ash dam. Run-off from the dam will also need to
be collected and recycled.
(iii) A series of interventions is required to address the other environmental concerns, including: (a) provision
for capturing and recycling waste water runoff from other locations at the plant; (b) adoption of a procedure for
managing accidental spillage of hazardous substances; (c) development of a procedure for containment of gas
and evacuation of personnel in the event of accidental release of gas from coke ovens; (d) additional equipment,
including pumps, and storage tanks, are needed to collect used oil and a site for its disposal, including recycling,
needs to be developed.
(iv) With respect to the safety of the Hwange Ash dam itself, a technical assessment of the dam wall is
required. One or more engineers with an appropriate background in dam safety are required for an independent
assessment of the ash dam wall. Not-with-standing the on-going works at the dam, in the event that there is
need for further remedial actions the inspection team would be required to develop a specific Action Plan for
immediate implementation.
Anticipated Positive Environmental Impacts
8.1.7 The Emergency Power Infrastructure Rehabilitation Project is proposed to remediate and mitigate a
number of negative environmental impacts resulting from the current operations of the Hwage power plant.
These include the following:
(i) Air pollution from the stack. Emissions include dust, sulphur dioxide, nitrogen oxides, and mercury
from burning coal, carbon monoxide and carbon dioxide. These emissions are affecting workers at the
21
site and the surrounding population. Atmospheric emissions of carbon dioxide are increased due to
inefficient combustion and inefficient operation. Acid rain from the combination of sulphur dioxide and
oxides of nitrogen and moisture in the air is thought to be contributing to increased acidity of local
ecosystems and loss of flora and fauna.
(ii) Air pollution from ash disposal has also been identified as major source of pollution for the working
environment at the plant site. It is also a significant threat to the health of the surrounding communities
who are exposed to the dust. The dust may contain heavy metals such as arsenic, lead, mercury,
selenium, which are a threat to water supplies and human health, including cancer, birth defects and
other problems. These pollutants can also decimate fish, bird and frog populations in and around the
dam site.
(iii) Ash is deposited at the ash dam through wet slurry. There has been environmental monitoring around
the ash dam to determine the impact of ash on groundwater. Samples from boreholes are taken to the
National Water Quality Laboratory each month. Results to date suggest no significant groundwater
contamination from the ash.
(iv) Disposal of waste water is a likely source of pollution of surface and ground water in the area. There is
no treatment of waste water before it is discharged into surface water streams. Further work is required
to determine the extent of the water contaminants, but it is clear that treatment of the water is required
before its release.
(v) The power plant makes use of a number of hazardous substances, including sulphuric acid, caustic soda,
chlorine, and hydrogen. Accidental spillage can be another source of pollution.
(vi) Accidental release of gas from coke ovens is another potential source of air pollution at the work site
and in surrounding communities.
(vii) Current practices for the disposal of used oils, including diesel, grease and engine oil, is also a threat to
the environment.
(viii) A salient environmental and safety concern at the Hwange Plant site is the ash dam itself. These concern
centers on the fragility of the ash dam retention wall due to inadequate maintenance. The proposed
project will undertake investigations and recommend ways to strengthen the dam retention wall. It must
be noted that the HPS has already done significant amount of work to address this issue through
compacting the ash dam retention walls as well as planting trees and grass on the wall to reduce erosion
as well as strengthen the wall. However in the unlikely event that the ash dam retention wall were to
collapse on account of heavy rains, it could result in the destruction of the entire plant which is situated
in the valley directly below the dam wall. This would result in a substantial reduction in total domestic
power availability that, in turn, would cause social and economic hardship. It would reduce power
availability for water treatment plants and increase the risk of outbreaks of cholera and other water borne
diseases.
Environmental and Social Audit
8.1.8 The Bank's environmental guidelines, stipulate that when involved in financing a retrofitting or
expansion project for an existing power generation or industrial facility with significant social and
environmental consequences, an Environmental and Social Audit should be conducted by an independent
consulting firm to objectively evaluate and obtain comprehensive information on the sources, causes and
impacts on the environment through a systematic, independent and documented process. The project has,
therefore, included in its design carrying out such as an audit utilizing the criteria developed in an ESMP
against which to evaluate project compliance. Since the Power Plant was prepared prior to 1992, where ESIAs
for Category 1 project was not mandatory, is the reason why the current ESMP may not have been sufficient for
such a plant and associated facilities. The ESMP will therefore be developed as part of a Compliance Audit, to
provide a management and monitoring tool for environmental and social aspects during project supervision and
22
implementation. This will also provide information about any past or present impacts resulting from the project
that were not anticipated by the ESIA. A provisional sum has been included in the project cost for the
consultants to carry out the audit estimated at US$1.2 million (Abridged TORs are provided in Annex VIII.2).
Climate Change
8.1.9 Regarding the GHG emissions, the technology used in the power plant to produce electricity from coal
as a fuel is inefficient in terms of producing high CO2 emissions per unit of power generated. However, the
modifications which the project targets through refurbishment and rehabilitation will lead some reduction of
CO2 emissions. In other words, there will be a reduction of emissions volume per unit of power generated.
8.1.10 The technological modifications will lead to environmental improvements, they will also lead to
increased plant availability and consequently consistent power resulting from reduced stoppages. The specific
reduction of emissions is considered a key enhancement for the existing technology that complies with the
Bank's policies in promoting sustainable development.
8.1.11 Zimbabwe is in dire need for electricity for its economic and social development. Besides, its energy
resources greatly depend on coal as an indigenous resource for energy. The sustainable development of energy
in a country like Zimbabwe includes the use of clean coal technologies. That is in accordance with the Bank’s
desire to strengthen and promote sustainable development in Africa through a lower carbon growth path.
8.1.12 CO2 emissions per capita in Zimbabwe are low at around 0.1compared to Egypt which is at 2.3 and
Nigeria at 0.9. Zimbabwe is categorized according to Kyoto Protocol as a non Annex- I country, i.e. has no
obligations for emission reductions but good practice encourages low carbon development path..
Public Consultation and Disclosure of ESMP
8.1.13 In order to ensure that the views and interests of all project stakeholders are considered in the project
design, public consultations are a requirement in the guidelines of the AfDB and the Zimbabwean
Environmental Management Agency (EMA). Through ZESA, stakeholder consultations have been carried out
through making announcement/advertisement in media describing the project and inviting interested parties to
review the draft final ESMP report; and distribution of an invitation and copy of the non technical summary
describing the context of the power plant, the technology employed, the impact on environment, the mitigation
measures and the ESMP.
8.2 Gender
8.2.1 The National Gender Policy. At national level, Zimbabwe has set out priorities for gender
mainstreaming and empowerment of women for the period 2008-2012. The National Gender Policy
Implementation Strategy and Work Plan seek to operationalize the commitments to gender equality and
women's empowerment derived from various national policies, statutes and decisions. Both ZESA and ZPC
have developed gender consciousness and appointed gender focal points to ensure that interests of both men and
women are taken on board in policy formulation and decision making.
8.2.2 Risk of HIV/AIDS Infections. Implementation of the rehabilitation project may not necessarily
disadvantage any particular gender group; per se. However, given that the rehabilitation works are likely to be
23
sub-contracted to service providers who are likely to bring in labor from distant places such as Harare, and often
times this labor force is likely to be men, comes the risk of the spread of HIV/AIDS. The national prevalence
rate at 13.6% shows a skewed bias towards women6 who are subjected directly by men who tend to lure girls
into unprotected sex, but also to wives who become the victims on the receiving end when husbands return
home infected. The Project Preparation Team, was presented with HIV/AIDS Policy of ZPC which promotes
practices that unite families in order to reduce the spread of HIV/AIDS and mitigate its effect on the affected
individual and his/her family by creating a supportive environment. In addition ZPC provides to all staff with
the information and education necessary to increase their awareness on the issues related to HIV infection and
AIDS. Complementing these efforts are programs that are being carried out by at national and local levels
funded by agencies such as DIFD, USAID, Global Fund, and programs like “Local AIDS Control Efforts
(PLACE), etc., which focus on school going girls and sex workers. Resuscitating the power plant presents the
potential for creating more job opportunities for both men and women.
8.2.3 Women’s Employment Opportunities. Currently the Hwange Power Station on average employs 724
people on regular jobs among which 81 (11%) are women mostly in semi- and unskilled jobs. While this
outcome is created by nature of jobs and remoteness of the site, ZPC is making an effort to encourage more
women to seek non-traditional jobs and take advantage of existing vacancy rate which stand at 8% within
Hwange Power Station itself. Zimbabwe being a member of SADC is expected to implement the Gender
Protocol which demands that women participation in the job market should be at par with that of their male
counterparts. A Gender Focal point has been appointed at ZPC headquarters whose job among others is to
ensure gender equity in recruitment. The project will, in addition, ensure that the environmental monitoring
training includes 50% women. In the broader context, women have been impacted by lack of reliable power
supply through job losses. Most women are employed in horticultural and farming industries which have been
significantly negatively impacted. So many Zimbabweans have lost their jobs due to scaling down of operations
in the farming sector. Rehabilitation of the power plant will bring back power supply to almost 2006 levels
hence bringing back activities to normality and creating job opportunities for women
8.2.4 Impact on Domestic Power Needs. An important aspect to be recognized is that women and girls have
suffered most due to lack of reliable electricity at household level. Traditionally, it is the responsibility of
women and girls to fetch water hence effects on water supply caused by lack of electricity has put a burden on
women and girls who have to stand for long hours queuing for water, or may have to walk long distances in
search of alternative sources of water. Therefore, the rehabilitation project will stand to alleviate the suffering of
women and girls and improve their well-being. Similarly, lack of electricity especially in urban areas, as noted,
impacted on women who have had to switch sources of energy for cooking to charcoal or wood. This has had
negative impacts on women and girls who have to go fetching wood or charcoal and also who have to endure
hazardous kitchen smoke during preparation of meals. In both instances, women and girls will benefit from time
and labor savings from either queuing or walking for long periods.
6 According to Zimbabwe National EPP-Spectrum Estimates, 2009, out of the national prevalence rate of 13.6%, women represented
60% of it and women at ages between15-24 represented 77% of the prevalence.
24
8.3 Social
8.3.1 The rehabilitation project is likely to bring in direct and indirect; short-term and long-term benefits and
negative impacts to the communities around the project area and to the economy and population as a whole.
Reduction of duration of load shedding and subsequent reduction in usage of inefficient alternative fuels like
firewood, liquefied petroleum gas, diesel generators, petrol generators and paraffin. This will cut production
costs, carbon emissions and improve on efficient utilization of fuel.
8.3.2 Employment Opportunities: It is estimated that in 2010 unemployment rate was at 90% (substantially
under-employed and disguised). The project will therefore offer as direct benefits in the short-term creation of
job opportunities both during implementation and operation. Currently the operation employs 724 people with a
vacancy level of 56 against the establishment. It is, therefore, expected that once the rehabilitation works are
completed, the station will be operating at close to optimal staffing levels. During implementation the works
will be outsourced to sub-contractors who are expected to directly employ additional people though on short-
term basis. Most of these will be in skilled and semi-skilled jobs recruited from the local communities hence
contributing towards poverty alleviation for many people through the multiplier effect.
8.3.3 Boost to Economic Activities: The restoration of power generation and improved distribution will re-
invigorate the countries economic activities and boost industrial production and contribute towards poverty
alleviation which was estimated at 68% (2004) of the population living below the poverty line. Power shortages
and shedding have mostly affected manufacturing industries (which shrunk by 2% in 2009), agriculture, mining,
and services. It is estimated that due to the economic down-turn industrial performance has been at less than
40%. Reduced productivity in these industries and sectors has meant large number of jobs lost. The agricultural
sector which contributes approximately 19% to GDP and employs a large number of people has also been
adversely affected by power shortages. It is, therefore, critical to restore power supply and distribution to
optimal levels.
Health Links
8.3.4 Workers Health and Safety: Some of the expected short-term and long-term negative impacts of the
project are health and safety related. Given the nature of work and environment, the workers may be exposed to
safety and health hazard associated with coal power plants and exposure to sharp objects and to air and water
pollution. Just like is the case for the regular staff of Hwange Power Station, the sub-contractors will be
expected to adhere to safety and occupational health and environment management policy of ZPC; and
adherence to Risk Management Policies of ZESA. Compliance to the set principles shall become an integral
part of special clauses in sub-contractor’s contracts.
8.3.5 Communicable Diseases: Regarding communicable diseases, exposure to HIV/AIDS and malaria are
most critical. The prevalence rates of HIV/AIDS are estimated at 13.6% at national level. The Hwange Power
Station is an existing concern hence the risk of workers exposing themselves to the scourge of HIV/AIDS is
minimized by the on-going HIV/AIDS awareness and prevention programs guided by both ZESA and ZPC’s
Policies. The risk however, rests more on the sub-contractors who will bring in labor from outside Hwange area
and who may come to the site without their spouses. To minimize the risk, the subcontractors will be obliged to
incorporate ZPC guidelines on HIV/AIDS awareness, prevention and mitigation measures. In addition, the sub-
contractors will collaborate with district level National Aids Council to ensure parallel and long-term programs
25
are implemented for the workers and communities they likely to interface with. Regarding malaria and other
water borne diseases, the project interventions especially in the ash dam and other drainage related activities
will assist in eliminating any potential for stagnant water within the project area both during implementation
and operation. Regular disposal of water at the ash dam will minimize possibility of creating such water ponds
that would be breeding areas for mosquitoes.
8.3.6 Outbreaks of Cholera and other waterborne diseases: In the recent past Zimbabwe has experienced
serous outbreaks of Cholera and other waterborne diseases. In August 2008 a nationwide cholera epidemic
resulted in 98,531 cholera cases and left 4,282 by June 2009. The underlying causes of cholera and other
waterborne diseases including typhoid are connected to the state of the water, sanitation and hygiene situation in
the country. Lack of adequate power generation has forced ZESA to load shed in so doing impacting on ability
to pump, treat and supply water to major cities, towns and growth centers. Since it takes time to fill the
pipelines after a shut-down, impact on the ability to pump is worse than indicated by the power availability
figures alone. Inability to supply water leads residents to go to unsafe sources. It also impacts on the ability of
the local authority to raise revenue from sale of water in order to pay for its costs to provide water. Based on
data from the UNICEF Report (August 2010), 7 of 10 major cities (excluding Harare) experienced power
shortages 7.9 hours per day. This project would, therefore, offer the opportunities of uninterrupted water supply
to water treatment works to ensure sufficient water is pumped and supplied to areas most needed such as highly
populated and vulnerable urban areas and growth centers.
8.4 Implementation arrangements
8.4.1 Implementation of environmental and social mitigation measures through implementation of the ESMP
is the responsibility of the Hwange Power Station Environmental Unit. The capacity in terms of human
resources, equipment and training are a critical requirement to ensure full implementation of the ESMP. The
project has included in its design re-designing the current ESMP being implemented by Hwange Power Station;
and upon recruitment of additional and dedicated environmental staff, conduct training. Approximately USD1.2
million has been budgeted for these activities including monitoring equipment.
8.5 Monitoring
8.5.1 Monitoring of ESMP implementation and adherence to prescribed mitigation measures is the
responsibility of the Chief Environmental Planner at ZESA headquarters. The Environmental Management
Agency (EMA) also plays a part in inspecting and monitoring compliance with the environmental laws. Both
EMA Officers at Headquarters and the Environmental Officer at Hwange district also play a key role in
monitoring implementation of the ESMP. The project has included in the design procurement of monitoring
equipment of pollutants and training for all environmental staff at Hwange, ZESA and EMA.
8.6 Scaling-up Institutional Capacity
8.6.1 The ESMP will take into consideration the establishment and enhancement of capacity building
concerning weaknesses of the structures and capacity for implementing, supervising and monitoring
environmental and social mitigation measures of the power plant, particularly the following weaknesses:
26
Absence of the Environmental Management Unit(s) in place at any level (i.e. the Ministry of Energy,
Ministry of Energy, ZESA, ZETC and ZPC).
Lack of systematic monitoring processes and monitoring equipment.
Following fixing of the two issues above, there will be need for capacity building of ZESA and ZPC in
terms of environmental management and monitoring.
27
Annex VIII.1 – ENVIROMENTAL AND SOCIAL MANAGEMENT PLAN SUMMARY
1. BRIEF DESCRIPTION OF THE PROJECT AND KEY ENVIRONMENTAL AND SOCIAL
COMPONENTS
The objective of the project is to improve the provision of adequate and reliable power supply in an
environmentally sound manner through the rehabilitation of the Hwange Power Station (HPS) and the power
transmission and distribution facilities in the country.
The envisaged project is situated in Hwange District within Matebeleland Province. Hwange district lies North
West of Harare at the very western part of the country. The district is predominantly a mining district and the
area has, in addition to Hwange Power Station, Southern Mining Coke Plant, Hwange Coal Gasification Plant,
and Hwange Colliery.
The project consists of the following main components: (A) Rehabilitation of the Hwange Power Plant
facilities; (B) Implementation of the re-designed ESMP; procurement of monitoring equipment and training; (C)
Conduct an Environmental and Social Audit and design of an Environmental and Social Management Plan; and
(D) Project Supervision and Auditing.
Project outputs will be refurbished items in the main generation blocks such as boiler feed pumps and feed
heaters in the boiler plant, turbine auxiliaries, excitation systems and induced draft fans which will lead to
increased plant capacity and reliability. Plant availability will also increase from around 65% to 90%. Other
outputs are refurbished auxiliary facilities such as the Boiler plant, Ash plant, Coal plant, cooling water pump
station at Deka and generator transformers that will result in an overall improvement in plant operations and
allow plant available capacity to increase from 450MW to 780MW.
2. MAJOR ENVIRONMENTAL AND SOCIAL IMPACTS
The project activities will mainly comprise repairs and replacement of existing equipment and limited civil
works. This will have minimum negative impacts on the local environment with waste and sludge management
and disposal being the significant source of impacts (See Annex VIII). The ESMP will clearly elucidate the
measures to be taken to protect the environment including observing proper working methods, replacement of
destroyed vegetation, ensuring proper disposal of discarded equipment and materials that may contaminate the
soil and ground water; prevention of nuisance in terms of dust, noise, odour, etc. The project provides protective
clothing for personnel engaged in the laying or cleaning of sludge / sewers and will also look at fencing and/or
covering some of the infrastructure which poses a great danger to humans such as open manholes and ponds.
Among positive outcomes, the project is proposed to remediate and mitigate a number of impacts due to lack of
maintenance of the Hwange power plant. Such works shall result in (i) significant reduction in air pollutants; (ii)
significant improvement to the coal handling and disposal system; (iii) significant improvement and safety
considerations for the Ash Dam and Ash Dam area; (iv) significant development of capacity building; and (v)
significant enhancement of the environment, livelihood and health protection of workers and people residing in
the surrounding areas.
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3. ENHANCEMENT AND MITIGATION PROGRAM
Zimbabwe Power Company / Zimbabwe Electricity Supply Authority (ZPC/ZESA) is committed to
rehabilitating and operating the Hwange Power Plant (HPP) to high environment, health and safety (EHS)
standards.
The following measures build on the design criteria for the power plant in order to reduce to a minimal level
any further potential negative impacts. Main areas where positive impacts can be introduced or maximized are
as the following.
3.1 Mitigation Program during Auditing
3.1.1 Air Quality
Emissions from the Stack:
Conduct an air quality dispersion modeling study to identify the locations of maximum concentrations of
pollutants emitted from the stack (SO2, NOx, TSP, PM10, PM2.5, CO).
Determine the most representative points to locate background air quality monitoring shelters of an air
quality monitoring system composed of at least three monitoring shelters.
Use the air quality dispersion modeling study to check the existing stack height. Examination of stack
height (around 100-110m for all stacks) should include testing of elongated stack heights up to the order
of 150m.
As a minimum requirement, the World Bank’s ambient air quality guidelines (in g/m3) for background
atmosphere will be followed.
A specialized Engineering Consulting Firm (ECF) is to be selected to undertake a comprehensive study
for identifying the most appropriate cleaning systems (pollution controllers) for the following abatement
measures:
1. Desulphurization system.
2. De-noxing processes.
3. Upgrading techniques for thermal generation efficiency.
Electrostatic Precipitators are to be refurbished for operating at full capacity, where more than 95% of
emitted dust particulates could be captured.
Emissions from the Ash Dam:
A specialized Engineering Consulting Firm is to be selected to undertake an integrated study for
identifying the most appropriate solution (pollution control measures) for the following ash treatment
issues:
1. Ash plant collection and disposal system.
2. Management of the Ash Dam:
→ Methods of preventing blown-out ash from dispersion into the atmosphere at the Ash Dam will be
investigated.
29
→ Safety of the Hwange Ash Dam will be assessed and effective remedial action will be selected and
implemented immediately.
3.1.2 Effluent Water Quality
Study the potential for optimum treatment, reuse, and recycle of the effluent water in various wastewater
streams within the power plant, including: cooling tower blow-down; ash handling wastewater; material
storage runoff; metal cleaning wastewater; and low-volume wastewater, such as air heater and
precipitator wash water, boiler blow-down, boiler chemical cleaning waste, floor and yard drains and
sumps, and back-flush from ion exchange boiler water purification units.
Identify most effective ways to control/eliminate contamination arises from demineralizers; lubricating
and auxiliary fuel oils; trace contaminants in the fuel (introduced through the ash-handling wastewater
system discharge); and chlorine biocides, and other chemicals used to manage the quality of water in
cooling system.
Cooling towers blowdown will be investigated against toxic chemicals that may be present in cooling
towers additives (including chemicals containing chromium and Zink whose use should be eliminated).
Recommended water treatment and wastewater conservation methods are to be studied for best selection
of the optimum solutions.
Procure New Laboratory equipment and refurbish online analyzer equipment
Ash Handling:
Alternative Systems for ash handling, such as dry handling of fly ash, which is capable of eliminating surface
impoundments, will be studied and investigated by a specialized Engineering Consulting Firm for potential
alleviation / elimination of ash disposal related impacts. Methods of potential economic use of such ashes
should be also examined.
3.2 Mitigation Program during Rehabilitation
3.2.1 Air Quality
Dust Emissions
Implementation of good site practices including:
rehabilitation method is not blasting, but is top-down deconstruction for replaced/ removed equipment, in the
reverse order to that of construction / erection, progressive, level by level having regard to type of
replacement;
wherever possible, external non-load bearing cladding shall be removed first;
debris to be removed at frequent intervals and stockpiles shall not be allowed to build up. Waste shall be
removed on a daily basis as far as reasonably practicable;
appropriate siting and maintenance of stockpiles of demolished materials as well as reconstruction materials
so as to minimize dust blow;
minimizing drop heights for material transfer activities;
roads will be kept damp via a water bowser;
30
roads will be compacted and graveled if necessary;
site roads will be maintained in good order;
regulation of site access;
sheeting of lorries transporting demolished materials and spoil;
enforcement of vehicle speed limits on dust roads to <35 km/h;
Coal Handling
Resuscitate the dust suppression system in the local plant;
Monitor quality of coal and control levels of fines; and
Modify/maintain pulverized coal ductwork to reduce incidence of pf leaks.
Ash Disposal
Look at possibility of selling the ash to road construction and cement manufacturing companies.
For ash dam dust there is need to plant grass on slopes and all exposed surfaces.
Need to compact the ash.
Install an irrigation system.
3.2.2 Liquid Effluent
Generation of site-run off
Mitigation activities will include the following:
No discharge of effluents into the surrounding environment - all effluents shall be collected and treated on
site or removed off site for treatment by approved firms.
Development of a site drainage plan which reduces flow velocity and sediment load.
Protection of temporary stockpiles of soil from erosion by using a reduced slope angle where practical,
sheeting and by incorporating sediment traps in drainage ditches.
Maintenance of well kept rehabilitation site.
Proper site management to minimize surface water run-off, soil erosion, soil remediation activities and the
impacts of liquid effluents.
Adequate maintenance of drainage systems to prevent any overflow.
Critical areas within the site shall be clearly marked and provided with protective measures to control site
run-off.
Temporary channels shall be provided to facilitate run-off discharge into the appropriate watercourses, via a
silt retention pond.
Drainage channels shall incorporate sediment basins or traps and baffles to enhance deposition rates.
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Wheel washing facilities will be installed to ensure no earth, mud and debris is deposited on roads. Sand and
silt in the wash water from such facilities shall be settled out and removed before (in line with effluent
discharge standards discharging the used water into water drains.
The contractor shall not discharge directly or indirectly into any public sewer storm water drain or any
effluent or contaminated water without the prior written consent of the site engineer in consultation with the
Assistant Plant Manager.
Contamination of the Aquatic Environment
Mitigation activities will include the following:
no discharge of effluents into the surrounding environment- all effluents shall be collected and removed off
site for treatment by approved firms;
development of a site drainage plan which reduces flow velocity and sediment load;
protection of temporary stockpiles of soil from erosion by using a reduced slope angle where practical,
sheeting and by incorporating sediment traps in drainage ditches.
maintenance of well kept construction site.
Ash Slurry System
Ash discharge lines are corroding and need to be replaced.
Noise Impacts
Implementation of good site practices including:
enforcement of vehicle speed limits;
strict controls of vehicle routing;
rehabilitation plant equipment to be fitted with silencers;
no noisy rehabilitation activities at night;
prohibition of heavy vehicle movements at night;
use of protective hearing equipment for workers;
carry out preventative maintenance of equipment and machinery to avoid excessive vibrations;
repair all steam leaks in the steam cycle;
monitor noise levels in workshops and surrounding areas;
provide the appropriate protective clothing and/or equipment; and
develop procedures for action to be taken in the event of noise levels being experienced which are above the
stipulated limits.
Socio-Economic Environment
Gender
The project is envisaged to have improvements that will benefit both men and women at project level
and wider context.
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ZPC is to make an effort to encourage more women to seek non-traditional jobs and take advantage of
existing vacancy rate which stands at 8% within HPP.
Potential relief of women’s and girls’ suffering due to reliable electricity supply at household level and
improvement to their well being.
ZPC/HPP is to create a supportive environment in order to reduce effect of HIV/AIDS on the individual
and their families due to influx of labor force to the area during rehabilitation activities.
Social
Reduction in duration of load shedding and subsequent reduction in usage of inefficient forms of
alternative energy sources.
Potential cut in production costs, carbon emissions and efficient utilization of energy sources.
Job creation will benefit surrounding communities through employing around 200 people during
rehabilitation phase and 56 people during full operation of the HPP.
Boost to economic activities via securing electricity supply enhances industry, agriculture, mining and
services and maintain jobs, which contributes to poverty alleviation.
Activities related to rehabilitation work take place on the construction site, i.e. on ZPC/HPP land.
Public and Industry Relations will be maximized through open dialogue between ZPC (through the
Assistant Plant Manager who has direct responsibility for EHS Liaison) and local authority, public and
industry representatives.
Health and Hygienic Practices
The contractors will be responsible for complete adherence to safety and occupational health and
environment management policy of ZPC and adherence to Risk Management Policies of ZESA.
Mandatory compliance to the set principles as an integral part of special clauses in Sub-contractor’s
contracts.
Waterborne Diseases
Project interventions to eliminate any stagnant water, especially in the ash dam area and other drainage
related activities for combating malaria and other waterborne diseases.
Enhance uninterrupted water supply to water treatment facilities and alleviate possible catastrophic
consequences on health and hygienic practices resulted previous due to unreliability of power supply.
Communicable Diseases
Subcontractors are obliged to incorporate ZPC guidelines on HIV/AIDS awareness, prevention and
mitigation measures.
33
Subcontractors are obliged to collaborate with district levels National Aids Council to ensure parallel and
long-term programs complementing these efforts on national and local levels activities funded by agencies
such as DIFD, USAID, Global Fund and programs like “Local Aids Control Efforts (PLACE), etc., which
focus on communities including school going girls and sex workers.
Training programs and health and safety measures will include knowledge about HIV/AIDS awareness,
prevention and treatment.
Specialized service provider will be sub-contracted by the Consulting Engineer and included in the BoQ
depending on the approach.
The service provider would also talk about other communicable diseases.
The information would be imparted to construction workers especially those coming in from outside the
project area through seminars, pamphlets and peer discussions.
Occupational Health & Safety
Good local and international construction practice in Environment, Health and Safety (EHS) will be applied at
all times during rehabilitation and refurbishment activities and account will be taken of local customs, practices
and attitudes.
Asbestos Control
There is a potential for finding Asbestos Containing Materials (ACM) during dismantling or rehabilitated
processes for reconstruction or re-erection of rehabilitation parts. If found, standard good practice measures will
be implemented as follows:
any ACM present in the superstructures shall be removed before commencement of the rehabilitation
works;
removal of asbestos materials in certain locations may run more smoothly if both asbestos contractors and
civil rehabilitation contractors work in tandem. This is due to the convenience of the main civil
rehabilitation contractor providing access (scaffolding etc.) to the ACM, for the asbestos contractor and
avoiding duplication of effort;
work actually involving the removal of ACM, that involves the handling of the ACM shall be carried out
by a Specialist Asbestos Contractor;
all remaining ACM on the site is not accessible to the general public.
Waste Management
Collection, segregation, re-use, recycling, storage, transportation and disposal measures are recommended to
avoid or minimize potential adverse impacts. The Contractor will incorporate these recommendations into a
Waste Management Plan that incorporates site specific factors, such as the designation of areas for the
segregation and temporary storage of reusable and recyclable materials
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3.2 Mitigation Measures during Operation
3.3.1 Air Quality
Emissions Guidelines
Several specific measures will be taken to reduce stack emissions from the power plant and to comply
with Zimbabwean and/or the World Bank/IFC(7)
standards.
Stack emissions to the air from the Hwange Power Plant are expected to be within the Zimbabwean, as
well as the World Bank guidelines(8)
, with possible increases of some pollutants depending on the
technology employed.
To the best expectations, the Hwange power plant is intended to operate within the EMA standards or, at
least, the following WB/IFC emission guidelines:
Emissions (in mg/m3)
(Dry Gas, Excess O2 Content 6%)
Pollutant
Non-degraded
Airshed
Degraded
Airshed(*)
PM 50 30
SO2 200-850 200
NOx 510 200
(*) DA= Degraded airshed (poor air quality); Airshed should be considered as being degraded if nationally
legislated air quality standards are exceeded or, in their absence, if WHO Air Quality Guidelines are
exceeded significantly.
Air Quality Guidelines
As described above, ZPC/HPP is committed to rehabilitating the boiler house and the pollution control systems
for achieving lower levels of background concentrations of pollutants.
3.3.2 Aquatic Environment
The design of the rehabilitation works will incorporate measures to reduce impacts on the aquatic environment.
In order to minimize potential impacts to water quality, ZPC/HPP will ensure implementation of good site
management practices including the following measures:
wastewater will be collected and treated before being discharged into the discharge system;
(
7) World Bank/IFC standards are considered international standards that could be used for acceptable reference.
(8) World Bank/IFC Pollution Prevention and Abatement Handbook - Part III: Thermal Power - Guidelines for New Plants, July 1998,
and its updates of 2008.
35
no solid wastes will be discharged into the liquid effluents;
design of drainage systems on site will be reviewed to prevent any contaminated surface run-off from
being discharged into the discharge system without prior oil separation and neutralization of any other
contamination; and
all effluent discharges will comply with local Zimbabwean and World Bank standards.
Put up oil interceptors at various points in the plant.
Write out procedure for handling and disposing of new and used oil.
Procure used oil receiver pneumatic operated pumps for topping up oil in engines.
Develop and implement a used oil management plan.
Avoid unnecessary spillage when decanting diesel.
Repair diesel leaks from oil burners.
Avail pump in diesel separator sump.
3.3.2 Noise Emissions
A number of noise mitigation measures will be built into the design of the plant in order to ensure that noise
levels are minimized and that all items of plant are operating to local and international standards.
Specific design mitigation measures include:
steam turbine generators, air compressors, pumps, and the emergency diesel engines will be enclosed in
sound enclosure, if necessary;
air compressors will be equipped with air silencers; and
noisy outdoor equipment will be reviewed and managed to be within to a noise limit of 90 dB(A) at one
meter.
In addition, all personnel working in noisy areas will be required to wear hearing protection.
3.3.3 Solid and Hazardous Waste Impacts
The mitigation and management measures during rehabilitation described above relate to both the rehabilitation
and operation phases.
Additional mitigation measures include:
Develop a site hazardous chemical register.
Develop a procedure for handling, transportation, storage and use of hazardous chemical.
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Develop emergency procedures to manage accidental spillage of hazardous substances i.e Clean up
procedures (SPILL PLAN).
Acquire PCB test kit to monitor PCBs in transformer oils.
3.3.4 Health and Safety
The operational health and safety measures during rehabilitation will be carried forward into the
operational phase of the power plant.
The mitigation and management measures will ensure that the health and safety of staff and any visitors on and
to the site is not jeopardized during operation of the plant.
4.MONITORING PROGRAM AND COMPLEMENTARY INITIATIVES
4.1 Baseline Audit and Environmental Survey Program
An Environmental and Social Audit (ESA) will be conducted for the Hwange Power Plant to provide a
systematic assessment of past and present environmental and social liabilities associated with the project prior
to the physical implementation of the rehabilitation program. The Audit results will constitute the findings,
conclusions and recommendations that will be carried forward into the ESMP and require follow-up actions,
namely corrective and preventive actions. The findings will be used to revise, re-design, and improve the ESMP
where necessary. The ESMP will be a condition of the loan for first disbursement.
4.2 Monitoring of Impacts during Power Plant Operation
4.2.1 Stack Emissions
Stack emissions will be monitored continuously during plant operation at a representative point in the stack.
Operational monitoring of stack emissions shall comprise monitoring the levels of: Sulfur Dioxide; Oxides of
Nitrogen; TSP; and Carbon Monoxide.
The automatic monitoring system used will be linked to an alarm to warn when emission limits for each
pollutant are being approached.
Concentrations will be recorded as hourly rolling averages and reports on stack emissions monitoring will
compare recorded emissions against determined levels and Zimbabwean and WB/IFC guidelines. Reports will
be submitted to the EMA, the AfDB and any other concerned authority on an annual basis (or as required).
4.2.2 Ambient Air Quality-Continuous SO2, NOx, C.
TSP / PM10 / PM2.5 Analyzers
The use of a continuous SO2, NOx, CO and TSP/PM10/PM2.5 analyzer allows for baseline air quality monitoring
on a continuous basis. The provision of three continuous monitors will provide the basis for “validating” the
calculations made via dispersion modeling and conditions set in the ESMP. The monitors will also include a
37
weather station (embedded in the station that will be placed at the power plant site) providing data on air
temperature, wind speed, wind direction, wind direction variability and mixing heights on a continuous basis.
4.2.3 Aquatic Environment
Monitoring of impacts of the power plant on the aquatic environment will include monitoring of the quality of
the effluents discharged from the power plant.
The operational monitoring of cooling towers and effluent discharge will include the parameters summarized in
Table-6 below.
Monitoring data will be analyzed and reviewed at regular intervals and compared with Zimbabwean and World
Bank guidelines. Records of monitoring results will be kept in a suitable format and will be reported (in
summary format with any exceptions identified) to the responsible government authorities and the AfDB or any
other concerned authority as required. As a result, the project company, in discussion with the ZESA, EMA and
the AfDB, in addition to any other concerned authority, will review the need to implement any additional
mitigation features, such as provision of further water treatment facilities on site and also on the need to
continue monitoring.
4.2.4 Waste Monitoring
Wastes generated on site and collected for disposal by skilled firms will be referenced, weighed and recorded.
Environmental audits will be undertaken which will assess the quality and suitability of on- and off-site waste
management procedures.
General Monitoring for a Coal-fired Steam Power Plant
Item Monitoring
Parameters
Sampling Frequency Monitoring Locations
Baseline
A baseline monitoring program may be required if existing data is insufficient for
decision making; such a program may be more rigorous than the rehabilitation and
operation monitoring programs.
Construction/Rehabilitation Phase
Air Quality Particulate
Matter
Every 2 to 4 weeks 4 locations minimum; at
nearest residences and site
boundary
Noise Decibels(Db) Weekly 6 locations minimum: at
nearest residences and site
boundary
Vibration Weekly
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Water
Quality
Oil and
grease
Total
Suspended
Solids
BOD
Total and
fecal
coliform
Total
ammonia
Daily
Daily
Weekly
Weekly
Weekly
At all discharges including
run-off
At all discharges including
run-off and waste water
discharges
At waste water discharges
At waste water discharges
At waste water discharges
Operations Phase
Air Quality
* Gas Plants
Sulfur
dioxide
Nitrogen
oxides
Carbon
monoxide
Particulate
Matters
Continuous/passive -2/4
weeks
Continuous/passive -2/4
weeks
Continuous/passive -2/4
weeks
Continuous/passive -2/4
weeks
Noise Bi-annually to annually 6-10 sites at nearest
residences around the plant
Water
Quality of
discharge
water
Biological
Oxygen
Demand
Total and
fecal
cloakrooms
Total
ammonia
PH
Temperature
Weekly
Weekly
Weekly
Continuous with alarm
Continuous with alarm
Daily
At waste water discharges
At waste water discharges
At waste water discharges
In discharged water
In discharged water
In discharged water
39
Oil and
grcase
Total residue
chlorine
Total
Suspended
Solids
Suite of
heavy metals
including
copper, iron,
zinc as a
minimum
Temperature
increase at
the edge of
the mixing
zone
Daily
Daily
Monthly
Seasonal
In discharged water
In discharged water and
wastewater discharges
In discharged water
At edge of mixing zone
5. INSTITUTIONAL ARRANGEMENTS AND CAPACITY BUILDING REQUIREMENTS
5.1 Capacity Building during Auditing
Establishment of the Environmental Management Unit (EMU) on the ZPC/HPP level.
Establishment of the Environmental Management Unit (EMU) on the ZESA level.
Establishment of the Environmental Management Unit (EMU) on the Ministry of Energy (MoE) level.
Basic training of persons employed to operate the environmental activities.
Basic training of persons employed to operate the monitoring activities.
Basic induction training for all employees on good rehabilitation and site management practice.
Capacity Building during Rehabilitation and Operation
Environmental Management Units (EMUs) at all levels: ZPC/HPP, ZESA and MoE receive support and
enhancement to undertake environmental management and monitoring activities on a continuous basis.
Basic training of persons employed to operate the environmental activities.
Basic training of persons employed to operate the monitoring activities.
Induction, specific and refresher training for all employees on good operation management practice.
Training methods, facilities & manuals
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5.2 Complementary Initiatives
ZPC/HPP/ZESA will have the overall responsibility for environmental monitoring activities and will
provide regular reporting both to the Bank and EMA as well as any other concerned authority.
EMA (as part of their regular activities), will be involved in the monitoring of the rehabilitation and
operation activities in order to ensure that proper environmental mitigation measures are employed.
The supervision missions of the Bank will validate and crosscheck whether the agencies responsible for
environmental management and monitoring have ensured that the mitigation measures have been carried
out.
Suitably qualified and experienced contractors will be responsible for the detailed design and
rehabilitation works of the power plant. Rehabilitation workers will be required to demonstrate
appropriate skills, qualifications and/or experience prior to employment.
During rehabilitation, HPP/ZPC/ZESA will ensure that all contracts with Contractors and sub-
contractors stipulate all management measures (as given in this ESMP), operational design criteria and
environment, and health and safety standards which must be implemented at the project site.
Implementation of these measures will be enforced and supervised by the Assistant Plant Manager, who
will have direct responsibility for the Environment, Safety and Quality Assurance program on site
during rehabilitation and operation. The Assistant Plant Manager is responsible for ensuring that
rehabilitation works comply with the requirements of the ESMP and all environmental permits.
During operation, direct responsibility for environmental compliance and the implementation of the
mitigation, management and monitoring measures described in this ESMP report, will continue to be
with the Assistant Plant Manager. He will report directly to the Chairman/General Manager of
HPP/ZPC/ZESA.
All staff employed at the plant will be trained in the following:
The training will include induction courses when staff are first employed at the power plant, with specialist and
refresher training as required by the job role. Training will be updated annually and occupational health and
safety procedures will be included within the Operations Manual for the power plant.
6. PUBLIC CONSULTATIONS AND DISCLOSURE REQUIREMENTS
In order to ensure that the views and interests of all project stakeholders are taken into account, a Public
Consultation was undertaken in accordance with EMA and AfDB requirements as part of the Environmental
and Social Examination process. This also included coordination with other government agencies involved in
the project, obtaining views of local people and affected groups.
The objectives of consultation and disclosure are to ensure that all stakeholders and interested parties, are fully
informed of the rehabilitation project, have the opportunity to voice their concerns and that any issues resulting
from this process are addressed in the ESMP and incorporated into the design and implementation of the
project.
The adopted methodology for the public consultation comprises basic elements, namely:
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discussions with local stakeholders and interested parties during preparation of the environmental
documents for First Examination and any local permitting requirements, including EMA requirements;
discussions with local stakeholders during Audit process and preparation of the Audit Report;
on-going consultation through an “open-door” policy during rehabilitation and operation of the power plant.
As far as public disclosure is concerned, major initiatives to inform the public and interested parties about the
rehabilitation project include the following:
disclosure of information describing the project; and
Disclosure of the Draft Final ESMP Report locally and via the AfDB Public Information Center (PIC).
During the preparation for Audit and the ESMP-Report, consultations are to be undertaken with a variety of
organizations to assist them in further identification of environmental and social concerns and the overall
development of the project. These stakeholders include the Zimbabwe Electricity Supply Authority (ZESA),
Zimbabwe Electricity Transmission and Distribution company (ZETDC), Zimbabwe Power Company (ZPC),
Zimbabwe Trust Fund (Zim-Fund), Ministry of Finance (MoF), Ministry of Energy and Power (MoEP),
Ministry of Water Resources Development and Management (MoWRDM), Hwange Power Station,
Environmental Management Agency (EMA) of Zimbabwe, and local population leaders.
The purpose of these consultations was primarily to provide information regarding the project, identify
published and non-published sources of relevant data and information relating to the site and surrounding area,
obtain views on the scope of the project, and open channels for ongoing discussions.
7. ESTIMATED COSTS
Since many of the mitigation measures presented are considered an essential, integrated component of the
rehabilitation and operation works, it is not possible to separate the specific costs of their implementation from
the overall construction and operation costs. However, an attempt for best estimate the relevant cost is presented
in the ESMP tables. The total envisaged costs is estimated around 3.62 million US Dollars, of which the Zim
Fund will ear-mark US Dollars 1.2 million.
8. IMPLEMENTATION SCHEDULE AND REPORTING
Environmental and Social Management and Monitoring activities will be implemented (according to the
ESMP), following the same project schedule, as all activities are mainstreamed in the project design.
Achievements/problems will be reported in the project quarterly progress reports and should be timely
addressed by the project management and the Bank.
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Annex VIII.2 – TOR FOR ENVIROMENTAL AND SOCIAL AUDITS
Introduction
This ToRs present the required Terms of Reference for the modalities & procedures of the Hwange Power Plant
Audit system. This is intended for use by auditors to provide a step-by-step guide to conducting an audit for the
Hwange Power Plant (HPP) from start to finish.
Being established during 1980s, the HPP had no legal requirement for a full Environmental and Social Impact
Assessment (ESIA). Due to the fact that Zimbabwe Power Company (ZPC) didn't conduct an ESIA at all, this
Audit is actually an Elaborated Audit, which includes some examination lies beyond the boundary of traditional
auditing.
1.1 The Purpose of the Auditing
In order to obtain the “Funding Approvals” of rehabilitation for the Hwange Coal-fired Power Plant, the
Zimbabwe Power Company (ZPC), an afiliate company to the Zimbabwe Electricity Supply Authority (ZESA)
has to Carryout an indepent Audit which will have to comply with the Auditing Guidelines of the AfDB.
The Bank's environmental guidelines, stipulate that when involved in financing a retrofitting or expansion
project for an existing power generation or industrial facility with significant social and environmental
consequences, an Environmental and Social Audit should be conducted which will objectively evaluate and
obtain comprehensive information on the sources, causes and impacts on the environment through a systematic,
independent and documented process. The project has, therefore, included carrying out such as an audit utilizing
the criteria developed in an ESMP against which project compliance should be evaluated.
1.2 Environmental Aspects
The operation of the Hwange Coal-fired Power Plant produces certain impacts on the local environment and the
surrounding communities.
The major aspects of the Hwange Power Plant that are presently impact the environment and the socity include
the following:
(ix) Air pollution from the stack.
(x) Air pollution from ash disposal, which is also a significant threat to the health of the surrounding
communities who are exposed to the dust.
(xi) Ash is deposited at the ash dam through wet slurry with potential threat to groundwater.
(xii) Disposal of waste water is a likely source of pollution of surface and ground water in the area.
(xiii) Accidental spillage of hazardous substances can be another source of pollution.
(xiv) Accidental release of gas from coke ovens is another potential source of air pollution at the work site and
in surrounding communities.
(xv) Current practices for the disposal of used oils, including diesel, grease and engine oil, is also a threat to
the environment.
(xvi) Fragility of the ash dam retention wall due to inadequate maintenance is a dangerous potential hazard that
could result in the destruction of the entire plant situated in the valley directly below the dam wall.
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1.3 The Consultant will have to:
1. integrate a specialized team of experts required to undertake the Audit;
2. conduct several visits, with the team of experts, to the site for carrying out site survey and data collection;
3. audit the environmental and social impacts of the operation activities; and develop an environmental
management and monitoring plan for to manage these impacts; and
4. compile, edit and prepare for final print a Final Environmental and Social Audit Report containing
standardized parts of the Audit Report.
Background
2.1 Current Status of the Power Plant
The Hwange Coal-fired Power Plant has installed capacity of 920 MW. However, current output is about 450
MW. Decline in the output is due to failure of components in both the generation blocks as well as common
station facilities.
Main items in the generation blocks that need replacement and maintenance are boiler feed pumps, feed heaters,
generator transformers, excitation system and induced draft fans.
Main items in the auxiliary (peripheral) service facilities needing refurbishment are:
Deka Pump Station: Deka Pump Station at Zambezi River is 47km from Hwange Power Plant. The
pipeline is protected from corrosion by Cathodic protection which is out of service. Water reservoirs are
both leaking and require re-lining. On top of that, the water treatment plant is in a state of disrepair and
can only produce 50% of the required water.
Coal Plant: Coal is handled by Front End Loaders (FEL) at the stock yard. Only 1 out of 3 FELs is
available. This limits the power that can be generated from the station by 50%.
H2 Plant: The hydrogen plant which produces hydrogen for cooling the six generators is only 50%
reliable and require refurbishment.
The Chlorine Plant: Chlorine is used to kill algae in the cooling water and cooling towers. This plant is
defective hence cooling tower efficiency is reduced.
Ash plants: Ash plants are 50% available. Stage I ash plant has 1 pump out of 3 in service. At Stage 2
ash plant one pumping line is available out of 2.
Ash lines: Only 2 lines out of 4 that take ash to the ash dam are working. This restricts the capacity to
move ash from the boilers to the disposal dams.
2.2 Rehabilitation and Refurbishment Project
The goal of the project is to improve the provision of adequate and reliable power supply in an environmentally
sound manner through the rehabilitation of the Hwange Power Plant (HPP).
Components included in the proposed project forms the critical activities that need to be conducted in the
rehabilitation of power infrastructure to bring the system to an acceptable level of performance. In order to
document the basis for the detailed audit of environmental impacts, the following plant design and operation
information, at a minimum, will be provided:
General description of the plant layout, buildings, and facilities.
Description of the location and design of cooling water intake and cooling water system structures.
Description of wastewater treatment facilities and other pollution control equipment.
Water balance diagram and quantities of wastewater discharge, temperature, and composition.
Description of facilities and practices for the disposal of water treatment sludges, used paints and
solvents, and other wastes.
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Description of facilities and practices for the storage and handling of oil and chemicals.
Description of the chimney design (location, height, number of flues, flue diameter, etc.).
Data on flue gas emissions (flow rate; exit velocity and temperature; emissions of sulfur dioxide,
nitrogen oxides, and total particulate matter in milligrams per cubic meter of flue gas and in nanograms
per joule of heat input).
Data on noise levels at various distances from operating plant equipment.
Description of coal handling and coal plant systems.
Description of ash disposal system and ash dame area.
Description of equipment and provisions for monitoring air pollution emissions, wastewater discharges,
and noise during plant operation.
Description of the location and design of any offsite facilities or connections to be operated by ZPC.
Description of the practices that are used to control noise, dust, erosion, and other adverse environmental
impacts during operation of the power plant and any offsite facilities.
Description of the facilities (housing, transportation, drinking water, sanitation, etc.) that are provided
for workers involved in the operation of the power plant and offsite facilities.
Summary of manpower employed at the HPP.
The Auditing Process
The auditing process takes place in 3 steps: Pre audit preparations, on site audit activities and post audit
reporting. The process is shown in Figure 1 below.
1.1. Step 1: Pre-audit preparations
The aim of pre audit preparations is to plan the on -site activities so that the audit can be conducted effectively
and efficiently. The major task during the pre audit preparations is reviewing the audit ToR, integrating the ToR
into a comprehensive audit plan and getting the audit team prepared for on site activities.
1.1.1. The Audit Plan
The audit team leader should prepare the plan for the on-site audit activities. This should be reviewed and
accepted by the auditee. This plan provides detailed information to the audit team, auditee, ZPC and ZESA. It
also facilitates scheduling and co-ordination of the audit activities. The contents of the Audit Plan will include
the following:
The reviewed Audit ToR (objectives, audit scope and criteria).
Dates and places where the audit is to be conducted.
Identification of the individuals having direct responsibilities for the auditee's organisational and functional
units to be audited including its managerial system processes (organisation chart).
Identification of the auditee’s sites and activities and (environmental) management systems that are
essential to meeting audit objectives (area and location maps).
Audit schedule (start and end dates, places, and persons to talk to including schedule of meetings with
auditee’s management, audit team meetings, inspections and interviews etc.).
References to work documents like guidelines, audit questionnaire, checklists and preliminary information
provided by the ZPC/ auditee and/or Task Manager of the AfDB.
Working and reporting language(s) of the audit.
Audit report topics, format and structure, expected date of issue and distribution.
Logistic arrangements (travel, etc.).
Budget.
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If the auditee objects to any provisions in the audit plan, such objections should be made known to the Task
Manager. They should be resolved between the Task Manager and the auditee before conducting the audit. Any
revised audit plan should be agreed between the parties concerned before or during the audit.
The extent of detail provided in the final audit plan may differ between the first and subsequent audit plans. The
details should also be adapted to suit the size and complexity of the power plant.
The audit plan should be sufficiently flexible to permit changes, such as any changes in emphasis, which may
become necessary as the on-site auditing activity progress.
Figure-1. Auditing Process
PROCESS AUDIT ACTIVITIES Supporting DOCUMENTS
1. Pre-audit
preparations
Check audit Conditions/ToR
(objectives, scope & criteria)
Audit program, ToR,
Environmental & Social
Management Plan, Project
Objectives, Project Logical
Framework
Plan audit Audit Plan
Appoint audit team
Contact auditee Audit questionnaire
Prepare work documents
Initial document review
2. Onsite
auditing
activities
Opening meeting
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Collect evidence:
Documents, interviews,
observations
Audit team meetings
Checklist,
Register of interviews,
Register of documents,
Register of observations
Audit findings:
Non-compliance/ issue of concern
Findings
Conclusions
Recommendations
Closing meeting
3. Post audit
reporting
Report Report, Environmental &
Social Management Plan
Elaborated Scope for the Audit Plan
The Auditors would identify a range of immediate environmental and safety concerns at the Hwange site, and
identify further actions that address issues identified by the Audit.
The Audit Plan should include, at a minimum requirement, the following investigations and examinations:
The major focus directed to the point source emission standards and Environmental and Social Auditing will
necessarily examine ambient air and water quality impacts, noise impacts, solid waste and socio-economic
impacts.
This investigation is presented to clearly describe the relationship between the activities and the work products
that comprise the Audit Report.
At the beginning of work, communications with concerned parties will focus on the important aspects of the
Environmental and Social Audit. A thorough discussion with representatives of various stakeholders will be
conducted.
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Local level officials from communities near the site will be contacted for information as a part of the Audit
procedures. Every effort should be taken to include broad representation from all economic and social sectors,
especially the potentially marginalized groups such as women, lower socioeconomic standard, etc.
This process will provide a basis for reviewing the issues that should be considered in the Audit. It is expected
that the issues will include fuel delivery systems, air emissions and ambient concentrations of pollutants,
impacts on water quality and quantity, development of the land surrounding the site and in the general area.
Analysis
Subsequent to gathering of data, the environmental issues will be addressed in terms of the environmental risks
associated with the operation of the power plant and the routine and non-routine operation of the facilities.
Mathematical models will be used. Mathematical models will be mainly required for modeling the air quality
impact of the stack, water impacts on the Zambezi River related to cooling water intake structures and
operations, including bankline equilibrium, bankline morphology, and noise impact in the work environment
and on the nearby community. The methods of inspection/analysis for the environmental issues not utilizing
mathematical model will follow the basic good engineering principles.
Based on practices to date, the issues to be addressed will cover, at a minimum, the following elements:
Noise impact auditing.
Air quality impact auditing.
Wastewater effluent auditing.
Solid waste auditing.
Site location and local conditions.
Socio-economic impact auditing.
Proposed environmental monitoring.
Specific focus of the Audit shall include points listed below:
Noise
Classification of site environment.
present background noise level.
Applicable noise limits and location of boundary.
Describe management plan envisaged.
Air Quality
Classification of site environment.
Present background air pollutants via thorough measurements.
Applicable ambient air quality limits for the area.
Recommended stack height and local dimensioning practice.
Recommended other pollution minimization methods / technologies that cope with the present situation.
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Wastewater & Solid Waste
Map local disposal options and associated quality requirements.
List generated types of waste and treatment existed/ recommended.
Comparison and examination.
Review Socio-economic Issues
All the impacts resulted have significant social consequences, and may also have social safeguard
issues that will have to be audited.
The findings of the Audit should indicate any subsequent studies that may be necessary if there are
social safeguard issues to be addressed.
According to this TOR, the Audit should take into account the nature, environment, human health
and safety, social and global environments aspects. The audit should consider natural and social
aspects in an integrated way. While the challenges associated with developing an integrated
approach are recognized a somewhat more consistent approach to social issues would nevertheless
be incorporated.
All these issues will be addressed in accordance with appropriate guidelines, particular those of the National
Environmental Authorities, the AfDB and the World Bank.
The recommendations will explicitly consider the mitigation measures that are considered necessary including
the effect of these measures on the operation of the power plant and most importantly the environmental
benefits. Environmental mitigation plans will also be recommended in terms of the requirements for
implementation including procedures and staff. The recommendation for, and duties of, a pollution control unit
at the plant, if necessary, will be addressed.
Review/Investigation of the Environment
This task will assemble, evaluate and present data on the relevant environmental characteristics of the
surrounding area. Data will include information on the following:
Physical environment: climate and meteorology; ambient air quality; surface and groundwater hydrology;
existing sources of air emissions; existing water pollution discharges; and receiving water quality.
Biological environment: flora and fauna including both terrestrial environment at and around the site
location, and aquatic environment, including Zambezi River; rare or endangered species; sensitive habitats,
including parks or preserves, significant natural sites, etc.; and species of commercial importance.
Present Socio-cultural environment: population; land use; planned development activities; community
structure; employment; distribution of income, goods and services; recreation; public health; cultural
prosperities; tribal peoples and customs, aspirations and attitudes.
Development of Environmental and Social Management Plan (ESMP)
This task should include details of the management initiatives to be implemented during both the rehabilitation and operation of the project. The ESMP should have three main components:
Institutional capacity issues.
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Environmental abatement/mitigation implementation program; and
Monitoring program.
Environmental Monitoring Plan
Monitoring should aim towards achieving the optimal operation performance as consistently as possible. This will require maintaining the combustion temperature and excess oxygen level within the optimal band in which PM, SO2 and NOx emissions are minimized simultaneously. Monitoring should address both emission and ambient levels of pollutants where these may be detrimental to human health.
EMA guidelines present emissions and ambient quality standards, however if not attainable for the present technology, World Bank guidelines could be used as an international guidance.
Monitoring Plan will establish a detailed procedure to monitor the implementation of abatement/ mitigating measures and continuously monitor the impacts of the project during rehabilitation and operation. The Monitoring Program should include continuous monitoring of the pollutants emitted from the facility, ambient air as well as air monitoring of the workspace (for dust, noise, etc...). The type and nature of the wastewater discharge will determine if surface water quality monitoring will be required. Costs of the monitoring facilities will be estimated.
1.1.2. Audit Conditionalities (ToRs)
The audit conditionalities/ToRs should as a minimum address the following items:
1. Start date: Begin date of the audit.
2. Status: Compliance, pre-approval or other audit).
3. Audit objective, scope and criteria.
4. Information and facilities: Information and facilities required for the audit.
5. Timing in operation cycle: specification of when the audit(s) take place in the operation cycle.
6. Reporting: Date and type of report required.
7. Confidentiality: Requirements concerning confidentiality.
8. Independence: Requirements concerning independence of auditors.
When the audit is scheduled the set conditions or the ToR needs to be reviewed prior to execution and worked
out more in detail. When the Task Manager has approved the set conditions or the ToR, the auditors should start
preparing the audit plan. Following the designation of the audit team, the audit team members work the audit
plan out more in detail.
1.1.3. Audit objectives
Objectives of the Audit include the following:
To determine the extent of compliance of the auditee with the power plant Environmental & Social
Management or Action Plan and or any environmental/social conditionalities in the project loan.
To determine the extent of compliance of a project with national legislative requirements.
To provide an in-depth view of environmental and social remedies associated with the power plant
operation.
1.1.4. Audit scope
The audit scope describes the extent and boundaries of the audit in terms of factors such as location and
boundaries, activities, organisation(s) and processes. The scope is plant dependent and should be decided by the
Task Manager. The audit scope should address the following issues:
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- The auditee’s organisational and functional units to be audited (institutional boundaries).
- The auditee’s area, sites / locations and activities (physical and geographical boundaries).
- Consultations with organisations other than the auditee (e.g. governmental organisations, NGO’s, power
plant beneficiaries).
- The time period covered by the audit.
- The focus (within the scope area, topics requiring specific attention).
1.1.5. Audit Criteria
Audit criteria are the policies, procedures, requirements or standards against which collected evidence is
compared. These audit criteria should be selected. They should be:
- In line with the audit objective.
- Relevant to the power plant or plant organisation (auditee).
- As specific as possible to avoid discussions on the legitimacy of findings during the close out meeting and the
report.
- Understood by the audit team and agreed upon with the auditee.
In the conditions/ToRs drafted in the framework of the of the audit program the criteria may be defined in
general. During audit plan preparation the criteria should be made as specific as possible. Audit criteria may
include:
Plant specifics:
Environmental Management Plan resulting from an assessment.
Logical Framework developed by Task Manager for plant supervision.
Company / organisation policies (where existing).
ADB policies & guidelines:
AfDB Environmental and Social Auditing Guidelines
AfDB Environmental and Social Assessment Procedures (ESAP)
AfDB Policies on Environment: Population & Health, Population Policy, Gender Policy, Poverty
Alleviation.
AfDB Guidelines for the Industry Sector.
AfDB Easy Reference Guides: PIPA ERG, PISCE ERG.
Other MFI Guidelines:
World Bank Pollution Prevention Handbook.
Industry Best practice.
Best practice manuals (e.g. Power Generation Sector).
Legislation:
Relevant international conventions and national legislation in Zimbabwe (the country of audit).
National Action Plans of Zimbabwe.
The audit objective, scope, audit criteria and any subsequent changes to these should be agreed upon with the
audit client and the auditee.
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1.1.6. Establishing the audit team
The audit team is established in consultation with the Task Manager and may comprise of auditors, auditors-in-
training and technical experts, working under the direction of the audit team leader.
1.1.7. Audit team tasks
The audit team is appointed in consultation with the Task Manager. The audit team leader, in consultation with
the audit team, should assign to each team member responsibility for auditing specific management processes,
functions, sites, areas or activities. Such assignments should take into account requirements for auditor
independence, expertise and efficient use of the resources. Changes to the work assignments may be made to
ensure the achievement of the audit objectives. The audit team members should review all relevant information
related to their audit assignments and prepare any work documents required for those assignments.
1.1.8. Initial contact with the auditee
The audit team leader should contact the auditee to establish communication channels, request documentation,
records, or other information if needed, and to initiate the arrangements (e.g. logistic) for the audit. An Audit
Questionnaire can be used to facilitate the collection of information. The need for a guide for the audit team
should be agreed.
1.1.9. Audit questionnaire
A specific Audit Questionnaire for the power plant should be developed by the audit team and sent to the auditee
to provide the audit team with information on past and present environmental and social conditions associated
with the power plant. The questionnaire should be plant and audit specific (focussed on the objective, scope and
criteria). The plant specific questionnaire should be as specific as possible to avoid being overloaded with non-
relevant information or information that cannot be used as audit evidence.
1.1.10. Working documents
Working documents are documents that should be used to guide and support an individual audit. Most of these
working documents are standard documents. These working documents are generic and should only be used as
guidelines and should not restrict the scope of audit activities, they should be made specific to each audit.
Working documents that can be used by the audit team include:
- Initial documented information provided by the ZPC / auditee and or Task Manager.
- The Registers to record information: of Findings, Interviews, Observations and Documents.
- Audit Checklist (generic).
- Audit Questionnaire (generic).
- Template for the Audit Report.
- Template for an Environmental & Social Management Plan.
The working documents are contained in. Working documents should be retained as specified in the relevant
documented procedures, at least until audit completion; the audit team members should suitably safeguard those
involving confidential or proprietary information.
1.1.11. Initial document review
Relevant project management documentation and records belonging to the auditee, possibly including recent
audit reports, should be subjected to an initial review by the audit team to prepare the audit plan including
working documents or the drafting of preliminary findings.
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The documentation should be reviewed for its adequacy, taking into account the size and complexity of the
power plant, and the objectives of the audit. If insufficient or inadequate information is available, further
requests should be made to gather additional information.
If the documentation is found to be inadequate, such that it does not satisfy the audit objectives or scope, the
ZPC and the auditee should be informed. Further resources should not be expended on the audit until such
concerns are resolved to the satisfaction of the audit team leader.
1.1.12. Audit Checklist
The Audit Checklist is a generic checklist containing lists of items that need to be arranged and issues that need
to be addressed while preparing and conducting the audit. As such the audit checklist provides an easy reference
tool for auditors, in particular for the team leader to check if all issues have been covered. Parts of the generic
audit checklist provided in the working documents should be made specific to the type of the power plant, audit
objective, scope and criteria and initial document review. The audit checklist should be used as a general guide
only as during the conduct of the audit. There are most likely more and other issues that need to be addressed
and more questions that should be asked during the on site audit.
1.2. Step 2: On site auditing activities
The execution of the audit in the field i.e. `on -site` involves an opening meeting with the ZPC, document
reviews, inspections, interviews, (team) meetings, preparation of findings and a close out meeting.
1.2.1. Opening meeting
An opening meeting should be held with the auditee’s management, and where applicable, representatives of the
plant’s owner company. Opening Meeting Checklist will include:
mutual introduction of the participants, including an outline of their roles and encouragement of active
participation in the audit;
review of the audit objectives and scope;
agreement on the audit timetable and other relevant arrangements with the auditee, such as the time and date
for the closing meeting, any interim meetings between the audit team and the auditee's management, and
any late changes;
a short presentation of the methods and procedures to be used to conduct the audit;
confirmation of official communication links between the audit team and the auditee;
confirmation that any resources and facilities needed by the audit team are available;
confirmation of matters relating to confidentiality;
confirmation of relevant work safety, emergency and security procedures for the audit team;
confirmation that during the audit, the auditee will be kept informed of progress and, if the audit objectives
appear to become unattainable, the audit team leader will discuss the reasons with the auditee and the ZPC;
confirmation of availability, roles and identity of any guides; and
confirmation of logistics and check whether it is allowed to take photographs.
1.2.2. Roles and responsibilities of guides
A guide, where assigned, should assist the audit team and act on request of the audit team leader. They may
witness the audit on behalf of the auditee and also have additional duties, such as ensuring that rules concerning
safety and security procedures are known and respected by the auditors on site. Care should be taken by the
auditors to ensure that guides do not exercise undue influence or interference.
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1.2.3. Orientation tour
Prior to the document reviews, inspections and interviews an orientation tour should be organised to provide the
audit team with a general overview of the project area or location and its current activities. The audit team leader
in consultation with the auditee should chalk out the route. A typical orientation tour takes approximately 10%
of the time available for onsite activities. While doing the orientation tour the audit team should take notes on
any situation related to the objective of the audit as they may influence the original audit plan.
1.2.4. Collecting and verifying information: Documents
Information should be collected to allow the audit team to determine whether the audit objectives will be met.
Some information may have been collected during the pre audit preparations and some may have been collected
by the auditee for review. The auditors, using alternative sources where necessary should verify, using various
types available for measurements, the information collected during the audit. Such information, after
verification, can be considered to be audit evidence. Information may be obtained and verified in different ways
from several sources, which include:
interviews;
observations of activities and the surrounding work environment and conditions;
documentation, for example; contracts, policy, objectives, plans, documented procedures, instructions,
licences and permits, specifications, drawings, orders;
documents; records, such as inspection records, meeting minutes, reports or logbooks on customer
complaints, audit reports, monitoring programmes and existing results of measurements;
data summaries, analyses, metrics and performance indicators;
reports from other sources, for example, customer or beneficiary feedback, regulatory authorities inspection
reports and external reports;
any sampling programmes, quality control of sampling and measurement processes.
any measurements, using appropriate instrumentation and measuring equipment, for any of the measured
parameters, such as gaseous pollutants from the stack and background concentrations of pollutants in the
ambient atmosphere; and
any modelling techniques that is used for identifying the locations of maximum pollutants concentrations for
best measuring the direct effect from the power plant.
1.2.5. Communication with the auditee
During the audit, the audit team leader should periodically communicate the status of the audit and any concerns
to the auditee as appropriate. Any concern about an issue outside the scope of the audit should be noted and
reported to the audit team leader, for possible communication to the AfDB Task Manager and auditee. Any need
for changes in scope, which may become apparent during on-site auditing, should be reviewed with and
approved by the Task Manager.
Where the available evidence indicates that the audit objectives are unattainable, the audit team leader should
report the reasons to the Task Manager and auditee to determine the appropriate action, which may include
termination of the audit or a change in the audit objectives.
1.2.6. Audit findings
Collected evidence should be evaluated against the audit criteria to generate the audit findings. An audit finding
can either be a Non-conformance or an Issue of Concern. Audit findings are based on information collected
through document review, inspections and interviews.
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Non-conformance
A non-conformance is a statement of fact about the deviation or deficiency of the auditee in fulfilling a criterion.
The statement contains a clear and concise description of the departure from a specific criterion.
Issue of concern
An issue of concern is a clear and concise statement of fact which indicates a potential departure / or deviation
from the criteria, a concern over an issue not previously identified as a criterion.
Findings should be supported by objective evidence gathered through document review, inspections, modelling
& measurements and interviews and should as a minimum contain the following information:
- A clear and concise statement of facts describing the non-conformance including the time / date and
location.
- Reference to documents, observations, modelling & measurements and interviews that support the non-
conformance as evidence.
- Reference to applicable criteria.
Audit findings must be recorded in a clear and concise manner and understood by the auditee and supported by
audit evidence.
The audit team should review and make final decisions about the audit findings (Non-conformances & issues of
concern) and the supporting audit evidence during the audit team meetings at the end of each audit day. The
audit findings should be accepted by:
- The interviewed persons (at end of the interview).
- The auditee representative (end of the day) to obtain acknowledgement of the factual basis.
- The auditee’s management (end of the audit).
Every attempt should be made to resolve any divergence of opinion concerning the facts, and unresolved points
should be recorded.
The information collected during an audit will inevitably be only a sample of the information available, since an
audit is conducted during a limited period of time and with limited resources. There is thus an element of
uncertainty inherent in all audits, and attention of users of the audit conclusions should be drawn to this
uncertainty.
1.2.7. Conclusions
The conclusions should be based on the findings and provide a true picture of the compliance status of the power
plant. Whereas findings are based on objective evidence providing a list of non compliance’s and issues of
concern, the conclusions reflect the opinion of the audit team on the situation taking into account the criticality
and significance of each finding in relation to the criteria and project objective.
1.2.8. Recommendations: Environmental and Social Management Plan (ESMP)
The recommendations should focus on the establishment of an Environmental & Social Management Plan
(actually an elaboration, and possibly completion or refinement, to the revised / redesigned ESMP presented by
the AfDB), in addition to any corrective and preventive measures (compliance audit).
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Recommended ESMP, including any corrective and preventive measures should be formulated based on the
conclusions and be specific for the direction in which solutions for identified problems can be sought. The
recommendations made by the audit team can be shared with the auditee during the closing meeting. The
formulation of concrete recommendations is the joint responsibility of the auditee in close cooperation with the
AfDB's Task manager and is not the prime responsibility of the audit team as this would jeopardise the position
of the audit team when conducting any follow up audit.
1.2.9. Preparation for the closing meeting
The audit team should confer prior to the closing meeting. The issues that should be discussed include:
review the findings and any other appropriate information collected during the audit;
prepare a complete list of audit findings;
write out list of non-conformities and issues of concern;
reach consensus on the audit conclusions –the team leader has the final word and decision;
agree on roles and tasks for the closing meeting;
prepare recommendations, including ESMP; and
Discuss subsequent audit follow-up, if applicable.
1.2.10. Closing meeting with the auditee
A closing meeting, chaired by the audit team leader, should be held with the auditee's management and those
responsible for the functions audited. The purpose of this meeting is to present audit findings to ensure that they
are clearly understood and acknowledged by the auditee.
Any outstanding diverging opinions between the audit team and the auditee should be discussed and if possible
resolved. If not resolved, both opinions should be recorded. A record of the closing meeting should be made.
The audit team leader should then present the team's conclusions and recommendations. Any comments by the
auditee should be noted. The conclusions and recommendations remain the final responsibility of the audit team.
1.3. Step 3: Post audit reporting
The final stage of the audit involves producing an audit report stating the findings, conclusions and
recommendations. The wording of the findings should not deviate from those agreed upon in the closing
meeting.
1.3.1. Audit report preparation
The audit team leader is responsible for the preparation, accuracy and completeness of the audit report.
1.3.2. Report content
The audit report provides an accurate record of the audit and should be based on the Environmental and Social
Audit Report template (see Annex 1) unless there are good reasons to deviate from this format. The requirement
for an Environmental and Social Management Plan as an addendum to the report should be discussed with the
AfDB's Task Manager.
56
The audit report should contain the following information:
Executive summary
Table of contents
Introduction
Project description
Audit objective, scope and criteria
Audit process
Audit team
Findings
Conclusions
Recommendations, including ESMP
Annexes
1.3.3. Report approval and distribution
The audit report should be issued within 4 weeks after the closing meeting. The report should be sent to:
- Task Manager/Project Officer.
- Division Chief.
- AfDB.
- Auditee.
- ZPC.
- ZESA.
The audit report should be dated and signed by the audit team leader and reviewed and approved as defined in
appropriate documented procedures. The audit report is the property of the ZPC and confidentiality should be
respected and appropriately safeguarded by the audit team members and all report recipients.
1.3.4. Retention of documents
Work documents and reports pertaining to the audit should be retained or destroyed (depending on
confidentiality) by agreement between the Task Manager and audit client.
1.3.5. Audit completion
The audit is completed when all activities in the audit plan have been concluded, including the distribution of the
approved audit report.
57
Audit Report (Appendix 1)
Introduction
It is recommended that the audit report include at least the following sections. Data that can be used direct from
AfDB documents in the AfDB Audit System and Working Documents are indicated in italics. Data that can be
obtained from AfDB documents are in bold.
Generic Audit Report
i Colofon
Name of Client
Signatures of the audit team members and the representative of the auditee
ii Executive Summary
A concise summary of all significant environmental and social areas of non-conformance and issues of
concern and a brief summary of the conclusions and recommendations (including ESMP).
iii Contents
The contents of the report should include the following sections:
1. Introduction
Client and auditee
2. Project Description:
Concise description of the project, the project organisation, the area / location and past and current
operations. The description should focus on project components with potential environmental and social
aspects in line with the defined audit objective, scope and criteria.
3. Audit Objective, Scope and Criteria
Audit objective, Scope and Criteria
4. Audit Process
Audit Plan: The date of the audit and brief description of the process e.g. pre audit activities, on site audit
activities including site inspection, interviews and document reviews and post audit activities. Exceptions
and deviations from the audit plan
5. Audit team
Audit Team: This section includes names of the audit team leader and team members
6. Findings
List of Findings; This chapter contains the individual findings of the audit subdivided in :
Non conformances
Issues of concern
The above paragraphs may be subdivided with headings based to the type of issues (environmental and
social) or the type of criteria applied.
7. Conclusions
Contains conclusions based on aggregated level, criticality or significance of the individual findings in
relation to the audit objectives, scope or criteria.
58
8. Recommendations
Contains (a set of) recommendations concerning corrective actions (compliance audit) and the
establishment of an Environmental and Social management Plan based on the audit findings and
conclusions
Annexes
1. Project organisation chart (auditee)
2. Area, location chart
3. Criteria (detailed list of the criteria)
4. Register of documents
5. Register of interviews
6. Register of observations
7. Register of modelling studies and measurements conducted.
59
ANNEX IX.1 – Project Implementation Schedule
Activity Responsible
POC approval project pipeline / Brief MMUProject preparation and appraisal MMU/ORSA/ONEC Zim Task Force (Zim TF) Zim TFOperations Committee (OC) Approval OCPOC Project Appraisal Approval POCNegotiation MMU/ORSA/ONECTranslation and processing for Board MMU/NECBoard Approval BoardSigning GECL/GOZEffectiveness GECL/GOZRecruitment of engineering supervision consultant Procurement Agent (PA) and MMUDesign and preparation of works bidding docs PA & Eng. Consultant Prequalification of Contractors & Env. Consultants PA & Eng. Consultant
Procurement of Contractors & Env. Consultants PA, PMTs and eng. ConsultantRehabilitation Works PMTs, Eng. Consultant and Works contractors Environmental and Social Audit Env. ConsultantProject completion
1Advance Contracting is considered for the engineering consultant the advance contracting can only start when the procurement agent is on the ground
Feb Oct Nov DecApr May Jun Jul Aug SepSep Oct Nov Dec Jan
Schedule for Emergency Power Infrastructure Rehabilitation Project
2010 2011 2012Oct Nov Dec Jan Feb Mar MarApr May Jun Jul Aug
60
ANNEX IX.2 Procurement Plan
Procurement Packages with Methods
and Time Schedule
Description*Lot
NumberIFP Received
IFP No-
Objection Date
IFP Publication
Date (UNDB)
Estimated
Amount in UA
(Million)
Lumpsum or
Unit Rate
Procurement
Method
Pre-
Qualification
(Y/N)
Dom/Reg.
Preference
(Y/N)
Prior or Post
Review
Bid Closing
Date
Plan/
Revised/
Actual
Bid
Documents
Received
No- Objection
DatePQ Doc Issued Closing Date
Evaluation
Report
Received
No- Objection
Date
Bid Invitation
Date
Bid Closing-
Opening
Bid
Evaluation
Report
Received
No- Objection
Date
Draft
Contract
Received
No- Objection
Date
Contract
Amount in
UA(000)
Date
Contract
Award
Date
Contract
Signature
Start Date End Date
1 15 August 2011 18 August 2011 25 August 2011 14.870 Unit Rate ICB Yes Not Applicable Prior 19 Dec. 2011 Plan 17 Oct. 2011 24 Oct. 2011 25 August 2011 06 Oct. 2011 27 Oct. 2011 03 Nov. 2011 07 Nov. 2011 19 Dec. 2011 12 Jan 2012 25 Jan. 2012 8 Feb. 2012 10 Feb. 2012 25 Jan. 2012 15 Feb. 2012 15 Feb. 2012
Revised
Actual
2 22 August 2011 25 August 2011 01 Sept. 2011 14.960 Unit Rate ICB Yes Not Applicable Prior 22 Dec. 2011 Plan 17 Oct. 2011 24 Oct. 2011 01 Sept. 2011 13 Oct. 2011 03 Nov. 2011 07 Nov. 2011 10 Nov. 2011 22 Dec. 2011 19 Jan 2012 02 Feb 2012 15 Feb. 2012 17 Feb. 2012 02 Feb. 2012 24 Feb. 2012 24 Feb. 2012
Revised k
Actual
Bid Documents Bidding PeriodPre-Qualification Pre-QualificationBasic Data
Transmission and Distribution Rehabilitation
Draft ContractBid Evaluation
Ash Plant Rehabilitation Hwange Thermal
Power Station
Contract ImplementationContract Award
Procurement Packages with
Methods and Time Schedule
Description*Date EOI
ReceivedDate No-Objection
Selection
Method
Lumpsum or
Time-Based
Estimated
Amount in UA
(Million)
Prior/Post
Review
Bid Closing
Date
Plan/
Revised/
Actual
Date
Published
Closing
DateDate Received
Date No-
Objection
Date
Received
Date No-
ObjectionDate Received
Date No-
ObjectionIssuance Date
Submission/
Opening
Date
Submission
Evaluation
Report (T)
No-objection
Evaluation
Report (T)
Opening
Financial
Proposals
Draft
Contract
Received
Draft Contract
Amount in
Currcy. (000)
Date No-
Objection
Final
Contract
Received
Contract
Amount in UA
(000)
Contract
Award Date
Contract
SignatureStart Date End Date
Not Applicable (a) Not Applicable (a) QCBS Lumpsum 2.000 Prior 26 May 2011 Plan 01 Mar 2011 15 Mar 2011 07 April 2011 14 April 2011 07 April 2011 14 April 2011 07 April 2011 14 April 2011 21 April 2011 26 May 2011 09 June 2011 23 June 2011 30 June 2011 14 July 2011 21 July 2011 30 July 2011 21 July 2011 30 July 2011 30 July 2011
Revised
Actual
01 April 2011 08 April 2011 QCBS Lumpsum 1.200 Prior 01 July 2011 Plan 15 April 2011 29 April 2011 13 May 2011 20 May 2011 13 May 2011 20 May 2011 13 May 2011 20 May 2011 27 May 2011 01 July 2011 15 July 2011 29 July 2011 05 August 201119 August 2011 26 August 2011 02 Sept. 2011 26 August 2011 02 Sept. 2011 02 Sept. 2011
Revised
Actual
03 Nov. 2011 10 Nov. 2011 LCS Lumpsum 0.500 Prior 30 Jan. 2012 Plan 17 Nov. 2011 01 Dec. 2011 15 Dec. 2011 22 Dec. 2011 15 Dec. 2011 22 Dec. 2011 15 Dec. 2011 22 Dec. 2011 02 Jan. 2012 30 Jan. 2012 13 Feb. 2012 27 Feb. 2012 05 March 2012 19 March 2012 26 March 2012 02 April 2012 26 March 2012 02 April 2012 02 April 2012
Revised
Actual
Total Cost 3.70 Plan 0.00
0.00 Revised
0.00 Actual 0.00
Draft Contract Contract AwardShort List Proposal PeriodRequest for Expression of
Interest
Procurement of Engineering Supervision
Consultant
Accounts Audit Services
ESIA Audit and ESMP Production
Basic Data Terms of Reference Request for ProposalBid Evaluation
Technical (T) & Financial (F)Contract Implementation
Annex IX.3 SHORT TERM EMERGENCY RECOVERY PROGRAMME (STREP) –
BUDGET
Sector Requirement
($ million)
Humanitarian assistance 640
Agricultural support 980
Water & sanitation 1,040
Local authorities 450
Other public infrastructure (trunk & access roads, bridges and rail) 600
Health 820
Education 800
Civil service skills retention 890
Electricity 1,040
Power imports 60
Power transmission & distribution
networks rehabilitation
80
Kariba South Bank extension 400
Hwange 7 & 8 expansion 500
Total 7,260
Lines of credit for companies 1,150
Grand Total 8,410
62
Annex X - ZESA HOLDING GROUP PERFORMANCE ANALYSIS
10.1 ZESA Institutional Framework and Industry Structure
Following the passing of two Acts by the Parliament of Zimbabwe, the Electricity Act
(Chapter 13:19) and the Rural Electrification Fund Act (Chapter 13:20) comprehensive
reforms have since been experienced in the electricity industry. The Electricity Act also
ushered in the formation of five successor companies, the Zimbabwe Power Company (ZPC),
Zimbabwe Electricity Transmission Company (ZETCO), Zimbabwe Electricity Distribution
Company (ZEDC), ZESA Enterprises and Powertel Communications.
In line with the approved structure, all power generation assets and operations are under
ZESA Holdings generation subsidiary, the Zimbabwe Power Company (ZPC) formed in
October 1996. Distribution assets and supply functions fall under the Zimbabwe Electricity
Distribution Company (ZEDC), ZESA Enterprises, another subsidiary of ZESA Holdings
comprises of four business units namely ZESA Technology Centre, Production and Services,
Transport Logistics and Projects. It is a flexible investment arm for ZESA Holdings that has a
diversified business portfolio. Transmission grid assets and operations fall under the
Zimbabwe Electricity Transmission Company (ZETCO),
A separate Rural Electrification Fund, a Board and Agency have been set up under the Rural
Electrification Fund Act, passed in January 2002. The Agency is administering a special fund
formed under this Act to finance rural electrification projects. The Board is accountable to the
Minister of Energy and Power Development.
Zimbabwe Electricity Industry Structure
MINISTRY OF ENERGY & POWER DEVELOPMENT
ZIMBABWE ELECTRICITY REGULATORY COMMISSION (ZERC)
Independent Power Producers (IPPs)
ZESA HOLDINGS (PVT) LTD
ZIMBABWE POWER COMPANY (PVT) LTD (ZPC)
ZIMBABWE ELECTRICITY TRANSMISSION AND
DISTRIBUTION COMPANY (PVT) LTD (ZETDC)
ZESA ENTREPRISES (PVT) LTD (ZENT)
RURAL ELECTRIFICATION AGENCY (REA)
63
10.2 Staffing and Human Resource Development
The severe brain drain of technical and professional staff continued during 2008 when the
group lost 43 engineers, 122 artisans/technicians, 9 accountants and 13 IT personnel. The
year 2009 witnessed a slowdown of the brain drain with a loss of 8 engineers 29
artisans/technicians and 2 IT personnel. In response to the loss of skills to the diaspora
particularly to Britain, Australia, New Zealand, Botswana, Namibia and South Africa, efforts
were made to attract skilled former ZESA employees in order to minimize the gap created by
the brain drain. Assessment interviews were carried out and 57 candidates have so far been
appointed to vacant posts. The exercise is ongoing since there are still some vacant posts to
be filled. The table below shows the Group’s Human Resources by Employee Categories:
ZESA Group Manning Levels – Dec. 2009
Employee Category Established
Strength
Var.
% in
Place Male Female Total
Exec. Mgmt. 9 8 0 8 1 89
Snr. Mgmt. 68 58 7 65 3 96
Mid. Mgmt 205 141 25 166 39 81
Professionals 824 555 79 634 190 77
Skilled 1664 976 179 1155 509 69
Semi-Skilled 4509 3066 454 3520 989 78
Gen. Workers 235 75 8 83 152 35
Total 7514 4879 752 5631 1883 75
10.3 Accounting, Internal Control and Audit
The directors are responsible for the maintenance of adequate accounting records as well as
the preparation and integrity of the financial statements and related information in a manner
that fairly presents the state of affairs and the results of the Group’s operations. External
auditors (KPMG Chartered Accountants (Zimbabwe)) are responsible for carrying out an
independent examination of the financial statements in accordance with International
Standards on Auditing and reporting their findings thereon.
The directors are also responsible for the Group’s systems on internal financial control. There
are designed to provide reasonable, but not absolute, assurance as to the reliability of the
financial statements and to safeguard, verify and detect misstatement and losses.
In preparing the Group’s financial statements, appropriate accounting policies have been
applied, as have the relevant International Financial Reporting Standards, unless otherwise
stated and are supported, where necessary, by reasonable and prudent judgment and
estimates.
10.4 Financial Performance
The operating environment for the year ended 31 December 2009 improved significantly
from that obtaining in 2008 mainly because of the introduction of a multicurrency system
which saw inflation tumbling and many economic and business variables stabilising.
However as the year progressed new challenges crept in, the major one being liquidity
problems that seriously inhibited economic activity. The group adopted the United States
Dollar (USD) as its functional currency with effect from 1st February 2009. Year on year
inflation which rose to reach about 231,000,000% in July 2008 after which compilations was
64
suspended tumbled to an average of 7.9% in 2009 as availability of goods improved mostly
through imports. This brought about stability in planning and operations of the Group.
The jump of the tariff from the Z$ one which in USD terms was almost zero to the adjusted
new tariff of 7.53 USc/kWh was too high for customers who were affected by the
combination of the global financial crisis and liquidity challenges in the local economy
resulting in many customers defaulting and the Group experienced liquidity problems. The
rollout of a prepayment meter program in 2010 helped the utility to earn revenues of about
USD 40 million per month as compared to USD 6 million earned in previous months.
Total loans as at 30 September 2010 amount to US $426.6 million, of which foreign loans
constitute USD309.1 million that is 72% of the total loans and local debt makes up 28% or
USD117.5 million of the total debt. Out of the total loan amount, USD 395.1 million or 93%
make up the current portion, which represents loan capital repayments falling due within
twelve months.
ZESA Holdings Group Management Accounts for period ending 30 September 2010 are
presented in the remaining sections of this annex. It is worth noting that the external auditors
had expressed an adverse opinion on the group financial performance and cash flows and
qualified opinion on the group financial position as reported to the honourable minister of
Energy and Power Development in the independent auditors’ report of 30 September 2010
accompanying ZESA holdings group annual report 2009. The basis for stated auditors’
opinion and qualifications relate to the effects of changes in foreign exchange rates and
financial reporting in hyperinflationary economies in addition to reliance on estimate rather
than actual usage to determine revenue relating to Zimbabwe Electricity Distribution
Company (private) Limited, a subsidiary of ZESA holdings (Private) Limited and lack of
audit evidence to determine the reliability of the estimates and evaluate whether revenue is
materially misstated and the corresponding effects on trade receivables.
65
STATEMENT OF COMPREHENSIVE INCOME FOR PERIOD ENDED 30
SEPTEMBER 2010
THIS MONTH YEAR TO DATE
DESCRIPTION NOTES ACTUAL BUDGET VARIANCE % ACTUAL BUDGET VARIANCE %
Revenue
Electricity Sales 1.1 39 091 545 50 484 700 (11 393 155) ( 23) 379 331 440 503 627 877 (124 296 437) (25)
Other Income 1.2 5 184 584 7 086 001 ( 1 901 417) ( 27) 44 187 357 59 073 905 (14 886 548) (25)
Total Revenue 44 276 129 57 570 701 ( 13 294 572) (23) 423 518 797 562 701 782 ( 139 182 985) (25)
Expenditure
Payroll Costs 2.1 9 865 945 9 022 179 (843 766) ( 9) 83 120 175 79 452 538 ( 3 667 637) ( 5)
Generation Costs 2.2 5 663 619 21 746 341 16 082 722 74 71 674 703 193 181 886 121 507 183 63
Electricity Imports 2.3.3 4 589 773 8 305 800 3 716 027 45 49 719 277 71 143 534 21 424 257 30
Transmission & Distribution Costs 2.3 3 914 428 9 424 681 5 510 253 58 51 480 149 73 200 470 21 720 322 30
ZESA Holdings 2.6 271 897 2 105 089 1 833 192 87 2 271 172 2 290 089 18 917 1
ZESA Enterprises 2.5 1 475 286 2 204 481 729 195 33 15 705 324 17 721 096 2 015 772 11
Powertel Communications 2.4 589 262 418 155 (171 107) (41) 3 487 328 3 339 942 ( 147 386) (4)
Provision for Bad debts 2.3 1 584 007 79 621 (1 504 386) (1889) 31 508 451 732 464 (30 775 987) (4202)
Depreciation 7 020 052 7 516 986 496 935 7 63 189 192 66 038 608 2 849 416 4
Total Expenditure 34 974 269 60 823 334 25 849 065 42 372 155 771 507 100 627 134 944 856 27
Operating profit
before finance charges 9 301 861 (3 252 633) 12 554 493 386 51 363 025 55 601 155 (4 238 129) (8)
Finance Charges
Exchange Differences 6 114 197 318 904 (5 795 294) ( 1 817) (2 260 080) 2 121 260 4 381 340 207
Foreign Loans Interest 1 340 655 1 902 534 561 879 30 13 799 891 13 574 912 ( 224 979) (2)
Other Finance Charges 920 620 466 000 ( 454 620) ( 98) 5 618 227 2 914 101 (2 704 125) (93)
Net Profit/ (Loss) 926 389 (5 940 070) 6 866 459 116 34 204 987 36 990 881 ( 2 785 894) (8)
66
STATEMENT OF COMPREHENSIVE INCOME BY COMPANY
ZESA HOLDINGS
POWERTEL
COMMUNICATIONS
ZESA
ENTERPRISES ZPC ZETDC
DESCRIPTION
REVENUE
Sale of electricity 0 0 0 18,356,512 360,974,928
Inter-Company electricity sales 0 0 0 170,214,826 0
Interest receivable 1,551 0 613 0 6,374,577
Connection fees 0 0 0 0 3,996,856
Non Core subsidiary Income 483,745 2,369,470 1,337,041 0 0
Miscellaneous income 75,321 60,147 172,021 699,418 3,592,633
Management fee income 16,661,623 0 0 0 0
Inter company Income 823,675 6,578,295 17,621,993 0 0
TOTAL 18,045,915 9,007,912 19,131,669 189,270,756 374,938,994
EXPENDITURE
Payroll costs 3,474,467 1,655,985 3,121,275 19,970,660 54,897,788
Overheads and general exps 2,045,005 3,487,328 1,649,075 9,763,042 32,469,028
Electricity Imports 0 0 0 0 49,719,277
Electricity Purchases Local 0 0 0 0 0
Inter-Company electricity purchases 0 0 0 0 170,214,826
Generation costs 0 0 0 60,025,948 0
Transmission costs 0 0 0 0 1,754,675
Distribution costs 0 0 0 0 14,552,510
Non Core costs 226,167 0 14,056,250 0 0
ZERC Levies 0 0 0 1,885,713 2,703,936
Bad Debts provision 6,664,649 0 0 27,939,931 31,508,451
Depreciation 1,036,547 1,293,546 1,240,542 31,639,760 27,978,797
Management fees 0 450,027 89,321 8,526,716 7,595,559
TOTAL 13,446,835 6,886,885 20,156,463 159,751,770 393,394,846
Operating surplus before finance charges 4,599,080 2,121,027 (1,024,794) 29,518,986 (18,455,852)
Finance charges 713,087 14,238 232,479 9,157,371 6,984,334
Net Profit /(Loss) 3,885,993 2,106,788 (1,257,273) 20,361,615 (25,440,186)
67
STATEMENT OF FINANCIAL POSITION
NOTES 30 SEPTEMBER 2010 31 DECEMBER 2009
ASSETS
Non Current Assets
Property, Plant and Equipment 8 1,744,830,603 1,781,985,677
Intangibles 9 1,787,436 1,787,863
Investments 3 639,690 790,470
1,747,257,729 1,784,564,010
Current Assets
Inventories 4 94,162,509 77,376,990
Trade and Other Receivables 5 270,291,911 171,190,493
Cash and Cash Equivalents 16,659,599 11,252,208
381,114,019 259,819,692
Total Assets 2,128,371,748 2,044,383,702
EQUITY AND LIABILITIES
Equity and Reserves
Share Capital 0 0
Non Distributable Reserves 1,112,125,509 1,112,125,509
Accumulated Profit /(Loss) (33,330,292) (67,535,279)
1,078,795,217 1,044,590,230
Non Current Liabilities
Long Term Loans 7 31,510,620 40,256,150
Post Employment Benefits 93,518,417 93,518,417
Deferred Taxation 53,186,458 53,186,458
178,215,495 186,961,025
Current Liabilities
Trade and Other Payables 6 472,591,795 423,763,526
Current Portion of Long Term Loans 7 395,062,893 385,063,266
Bank Overdraft 3,706,348 4,005,655
871,361,036 812,832,447
Total Equity And Liabilities 2,128,371,748 2,044,383,702
68
STATEMENT OF FINANCIAL POSITION BY COMPANY
ZESA
HOLDINGS ZETDC ZPC
ZESA
ENTERPRISES
POWERTEL
COMMUNICATIONS
ASSETS
Non Current Assets 42,756,486 707,018,817 932,001,992 33,855,890 31,624,545
Current Assets
Inventories 40,737 67,518,619 16,629,956 9,402,001 571,196
Trade and Other Receivables 17,157,492 245,319,545 202,930,352 7,455,431 4,173,261
Cash and Cash Equivalents 841,162 12,375,354 2,426,956 501,130 514,997
TOTAL ASSETS 60,795,876 1,032,232,335 1,153,989,255 51,214,452 36,884,000
EQUITY AND LIABILITIES
Equity and Reserves
Share Capital 0 0 0 0 0
Non Distributable Reserves (71,048,602) 313,081,612 750,649,393 28,442,413 23,465,413
Accumulated Profit /(Loss) 3,885,993 (25,440,186) 20,361,615 (1,257,273) 2,050,259
(67,162,609) 287,641,426 771,011,008 27,185,140 25,515,672
Non Current Liabilities
Deferred Tax 205,796 49,230,877 0 0 3,749,785
Post Employment Benefits 93,518,417 0 0 0 0
Current Liabilities
Trade and Other Payables 15,938,658 479,960,432 194,844,717 20,079,819 3,116,919
Current Portion of Loans 17,460,678 215,399,600 164,637,358 3,849,493 4,501,624
Bank Overdraft 834,936 0 2,771,412 100,000 0
TOTAL RESERVES AND LIABILITIES 60,795,876 1,032,232,335 1,153,989,255 51,214,452 36,884,000
69
FINANCIAL INDICATORS
Profitability Ratios
Return on Sales
Historical Cost
12.13%
Return on Sales 12.13%
Return on Total Assets 4.83%
Return on Capital Employed 4.09%
Current Ratio
0.44: 1 Acid Test Ratio 0.33: 1
Debtors Collection Period 287 Days
Profitability Ratios
The Return on Sales recorded a positive 12.13%. This shows a favorable rate of return on
sales. However it should be noted that the operating expenditure level is suppressed due to
cash flow constraints.
The Return on Total Assets is a positive 4.83%. This ratio reflects a favorable return on the
use of the group’s assets. However it should be noted that some of the group’s operational
assets are due for replacement.
The Return on Capital Employed is a favorable 4.09%. This ratio shows a fair rate of return
on capital. However the capital is mainly made up of a Non Distributable Reserve which
resulted from dollarization. There is need to enhance the share capital.
Liquidity Ratios
The Group has an unfavourable liquidity position clearly shown by a current ratio of 0.44:1
and an acid test ratio of 0.33:1. The ratios are well below the recommended standard ratios of
2:1 (current ratio), and 1:1 (acid test ratio). The Group’s Debtor’s Collection Period is 287
days. This indicates that whilst making a profit as shown in the above ratios and results, the
cash flow position is strained due to the delay in settling of accounts by customers.
