US$3 Billion Sengwa Coal Deal Condemned

Local civil society organisations have condemned an impending multi-billion dollar thermal power deal between Zimbabwe and a Chinese investor, accusing government of engaging in deals that do not translate to sustainable development.

Zimbabwe’s Rio Energy Ltd’s plans to construct a US$ 3 Billion thermal power plant in Sengwa, Gokwe District with financial assistance from Chinese investors.

Zimbabwe Environmental Law Association (ZELA) and Centre for Natural Resources Governance (CNRG) say this deal, despite the rising energy demands, comes with negative environmental and social costs.

In an analysis of the political economy of the Sengwa deal and its likely impacts on social and environmental rights of communities in Sengwa, civic players chided government for acting out of desperation.

“The conclusion of this coal plant investment deal is a negative step by the Government of Zimbabwe of increasing energy supply in the country through a globally condemned fossil fuel technology.

“There is no doubt that addressing energy deficits in the country remains at the centre of the country’s economic recovery, social and economic development and transformation. Notwithstanding the energy needs of the country, the proposed project comes with environmental and social cost costs which cannot go unchallenged.

“…desperation for investments is pushing the government to facilitate deals that may not be favorable to the people of Zimbabwe and the environment. The Government is racing to the bottom by attracting unfavorable deals which do not translate to positive sustainable development,” said ZELA.

“Coal is a dirty fossil fuel whose continued use has been receiving global condemnation as one of the chief drivers of global warming.”

Mining, currently anchored on production targets under the US$12 billion strategy, increases demand for energy and further stress supply deficits, currently backed by imports from Eskom (South Africa) and Mozambique.

The energy intensive extractive sector, together with other heavy industries, consumes approximately 40% of the country’s energy demand a rationale that could have pushed government to sign a deal.

ZELA and CNRG have called for a balance between attracting Foreign Direct Investment (FDI), which comes with stringent conditions, and respect for human rights as enshrined in Zimbabwe’s 2013 constitution.

They said China’s development approach of providing low-interest loans (soft loans) and resource backed loans to African nations, could further worsen a crippling debt crisis, as evidenced by other African countries entrapped by predatory loans.

ZELA and CNRG also warned of impending disruption of livelihoods for Sengwa, a rural community reliant on subsistence cotton farming and fishing, as families will be relocated to pave way for the plant.

“Chinese’s soft loans seem attractive, but they cost nations in the long run if the governments fail to pay of the debts. Critics have labelled China’s generosity in issuing loans often guaranteed with natural resources as new form of colonialism, especially in a debt-ridden country like Zimbabwe.

“Chinese companies have weak systems or no systems in place for conducting due diligence processes and adequately applying responsible business practices to avoid conflicts and human rights violations in their mineral production and supply chains.

“The establishment of the plant will result in household income losses, reducing self-reliance among families and destruction of safety nets. Relocation may deprive communities’ access to essential public amenities such as clinics, schools and clean sources of portable water.

“Communities are likely to be relocated without adequate compensation which will lead to vulnerability to hazards such as hunger, homelessness, diseases and other new socioeconomic challenges,” said ZELA.

The thermal power plant, is expected to produce 2 800 MW for both local consumption and exports, will help meet a national power demand ranging between 2200 – 2400 megawatts, against current depressed production of 1300 megawatts.

China Gezhouba Group Corporation (CGGC) and Power China International are both developers and investors of the Sengwa Coal Powered Station, funded through debt financing, with the Industrial and Commercial Bank of China formally expressing interest to finance the project.

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