View Record

TitleDefying the odds: Understanding the critical success factors for financing independent powers producers in Zimbabwe
AuthorZunguze, Timisela
SubjectDevelopment Finance
AbstractBackground: Since the introduction of legislation in Zimbabwe allowing private participation in generation, there has been significant investor interest in financing independent power producers (IPPs). However, this interest has not materialized into actual investment. Of the 29 IPPs licensed by the Zimbabwe Regulatory Authority (ZERA), only seven have reached financial closure and are supplying the grid. This dismal performance in the IPP space is a major concern for policy makers, particularly in light of the persistent power shortages plaguing the country. Stop gap measures such as the imports of power and load shedding are not sustainable and have detrimental effects on economic productivity. Expansion of private power generation is the only viable long term solution. In light of this, it is imperative to understand the factors that contribute towards successfully financing IPPs. Purpose: The purpose of this study is to explore and identify the critical success factors (CSFs) for financing IPPs in Zimbabwe and specific strategies to improve the implementation of IPPs, to ensure as far as possible, a win-win scenario for all stakeholders. Methodology: This thesis employs a mixed methods approach consisting of a qualitative first phase of expert interviews to identify a core list of success factors, followed by a quantitative second phase, in which a questionnaire survey is used to examine the relative importance and ranking of the factors and to determine whether the ranking of factors varies by stakeholder grouping. Findings: A total of 40 success factors were identified, and 38 of the 40 were rated as critical for financing IPPs in Zimbabwe by stakeholders. The study also revealed that the expected debt paying ability of the project; a transparent and cost reflective tariff framework and upholding of contracts are the most critical factors for all stakeholders. The results indicated that there is low agreement in the the ranking of CSFs between the private sector and public sector. Value: This study provides a valuable reference for all stakeholders that are interested in developing IPPs in Zimbabwe.
PublisherUniversity of Cape Town
PublisherFaculty of Commerce
PublisherResearch of GSB