Dema Power Plant

Dema Power Plant was built in 2016. It has an installed capacity to produce 200 megawatts from 228 diesel generators, however this was reduced to produce 100 megawatts with 111 generators. 25 to 27 000 litres of diesel are needed to produce the 100MW.

Zimbabwe Energy Distribution and Transmission Company (ZETDC) decided to purchase power from Eskom in South Africa considering that when ZETDC was buying electricity from the plant, it purchased it at US$13,45 per kilowatt/hour. This led to the plant largely being mothballed mid-2018.

Location/ Contact

The plant is near Seke, east of Chitungwiza, just south of the Harare Hwedza Road (Seke Road).
Tel: 077 373 1336
18° 5' 0" South, 31° 13' 0" East

Current structure

Physical

Dema Power Plant, or Dema diesel plant, is an installation of 228 diesel generators which have a capacity to produce 200MW. The generators ran from 05h00 until about 15h00. Finished in 2016, it produced for about 18 months before the high cost of production induced ZETDC to purchase power elsewhere, and the plant was used less until it was mothballed. It used 25 000 to 27 000 litres of diesel to produce 100MW.

Ownership

Dema Power Plant is owned by Sakunda Holdings. Aggreko Zimbabwe Plc is Sakunda’s technical partner for the Dema Plant.
The CEO in 2019 was Mberikwazvo Chitambo.
Aggreko Zimbabwe Plc acting operations manager in 2019 was Greg Rock.

History

In December 2014, it was announced that the Government awarded Sakunda Holdings a tender to immediately supply 200 megawatts of electricity. This was necessary due to a rapid decreasing of generation at Kariba Power Station, this month. This was all laid out in a letter dated 24 December 2015 from the Permanent Secretary for Energy and Power Development Patson Mbiriri to Zesa Holdings chief executive Engineer Josh Chifamba. The Emergency Diesel Power Station at Dema Substation was part of the Sakunda’s 10-year mega electricity project. It would cumulatively cost about $2 billion, and was expected to result in the country generating enough power for domestic use and export by 2018. The cost of power would go down from the implementation of price of 15,67 cents per kilowatt to 10,45 by 2018. The average price in the southern Africa region is 14 cents per kilowatt. ^[1]

In January 2016, the Zimbabwean government approved Sakunda's acquisition of 200 mega watt emergency diesel power plant at Dema substation. Sakunda partnered with ARUP, Energyst, Aggreko and Trafigura. The project is to be financed by Commercial Bank of Zimbabwe CBZ Holdings, Stanbic Bank and Ecobank. Grant Thornton would come in as project accountants and Mhishi Legal Practice as legal advisors. The project was implemented to deal with Zimbabwe's power crisis that had worsened by decreasing electricity generation at Kariba Power Station due to diminishing water levels at Kariba Dam. ^[2]

Concerns were raised about pollution and corruption. The power plant seems to have been erected without a mandatory environmental impact assessment. Environmental Management Authority (EMA) spokesperson Steady Kangate revealed that his organisation was waiting for the environmental impact assessment document from Sakunda. An employee at the company, who preferred anonymity, revealed a massive three million litres of diesel are consumed by the generators weekly, hence the high pollution levels. According to the Sustainable Energy Authority of Ireland, one litre of diesel used results in 2.68kg of Carbon Dioxide (CO²) being emitted into the atmosphere. In the case of Dema, which uses 400 000 litres every day, close to 1 072 tonnes of carbon dioxide are emitted into the atmosphere on a daily basis, causing serious health risks.

Sakunda Holdings was awarded the contract, initially pegged at US$194 million a year, without going to tender.

But for now, 2016, the Dema Power Plant continues to run under the management of the Office of the President and Cabinet, without the environmental impact assessment report. ^[3]

The People’s Democratic Party (PDP) said in a statement - It is unnecessary, unmanageable, too expensive and was meant to benefit only people close to President Robert Mugabe and the ruling Zanu PF, said PDP in a statement on Tuesday. ^[4]

Alex Magaisa also commented on a lack of transparency in the power plant dealings. ^[5]

In May 2019, while discussing the reopening of the plant, Sakunda CEO Mberikwazvo Chitambo justified the costs. “I get charged for the equipment and the power generation, the sum total of all the charges that I pay means I have to at least cover over 0,10 to 0,11 cents per kilowatt hour in US dollars. I am in business so I do not charge ZETDC the same tariff rate, I charge them starting at US0,13c,” said Mr Chitambo. “The primary reason why we charge in US dollars is that we are pricing against what we transmit to Aggreko Plc (Sakunda’s technical partner for the Dema plant) eventually. “When we were operating we were exempt and as we seek to restart we have to seek the same exemptions. The US0,13c per kWh took into account that were had (fuel duty) exemptions. If we did not receive the exemptions the cost of power would be in the order of 0,22 to 0,23 US cents per kWh. ^[6] ^[7]

In 2021, the Dema Diesel Power Plant was mentioned on p24 of Cartel Power Dynamics in Zimbabwe Case Study 2 The Fuel Cartels.

In addition to illicitly obtaining foreign currency, Kudakwashe Tagwirei’s Sakunda has imported duty free fuel and sold it at local market prices that included the import duty, basically appropriating the duty for itself. Sakunda was given National Project Status (NPS) for the Dema Diesel Power Plant, (Makichi, T., and T. Mangudhla. 2019. “Govt to Buy Dormant Dema Power Plant.” Business Times, December 12) which allowed for the importation of 25 million litres of duty-free diesel a month, when the power plant only consumed 12 million litres a month. (Zhou, T. 2016. “Dema Diesel Power project in 25 million litre fuel import storm.” November 14.) ZERA justifed this decision by claiming the extra fuel was for ‘emergency purposes’. (Zhou, T. 2016. “Dema Diesel Power project in 25 million litre fuel import storm.” November 14.) Sakunda is alleged to have sold the extra 13 million litres of diesel to consumers at retail price and by so doing, transferred to itself (Mpofu, B., and O. Gagare. 2017. “Duty-free fuel scam deepens.” The Independent, August 11) an estimated US$6.8 million a month that consumers believed was going to the government. In addition, Sakunda was given another NPS in 2015 for the Africa Chrome Fields venture where it partnered the Moti Group and the military. (Moti Group. n.d. African Chrome Fields. Accessed June 3, 2020. https://www.moti-group.com/mergers-and-acquisitions/african-chrome-feldspty-ltd/) ACF imported 12 million litres of duty-free diesel monthly. (Gagare, O., and H. Ndebele. 2017. “Mnangagwa in dodgy project.” The Independent, August 4)