| Technology Policy and Practice in Africa |
|Part II. Technology: Choice, Transfer, and Management|
The objective of this study was to examine the process of technology acquisition and development in Zimbabwe, at the Hwange Thermal Power Station. Also of interest were the implications for local industry and Zimbabwe. The study focused on the contractual arrangements at the power station, identifying the major participants in its construction and assessing the degree and extent of local technical capabilities in operating, maintaining, and repairing the power plant. To some extent the study also explored the constraints on capabilities within local industry and the development of such capabilities to supply the requirements of the station. To place the case study in a wider context, it examined the policies relating to technology in Zimbabwe, the international structure of the power-equipment industry, and the effects these are likely to have on efforts to build an indigenous technical capacity.
The first step was to review the literature on technology acquisition. I then examined the relevant secondary information and constructed the historical background of the project through newspaper reports and annual reports of the former Electrical Supply Commission (ESC) relevant officials. I relied on official documents, such as the Three-Year Transitional National Development Plan 1982/83–1984/85 (Government of Zimbabwe 1982) and the First Five-Year National Development Plan (Government of Zimbabwe 1986), and interviews with officials from various government departments for an overview of the technology policy of the country. Finally, I made three visits to the power station and carried out extensive, structured and unstructured interviews with management and several employees at various skill levels.
The study sought to answer the following questions:
1. To what extent did local industry participate in the construction of the power station?
2. What factors inhibited further local participation?
3. Are there any measures to increase such participation?
4. Did the Hwange project improve local technical capabilities in power-equipment production?
5. Does government have a clear policy on procurement of plants and machinery to develop local industry?
6. To what extent are local human resources being trained to reduce reliance on foreign expertise and to ensure effective technology acquisition?
The initial hypothesis was that the limited participation of local industry did not necessarily reflect a weak technological base in Zimbabwean industry. This hypothesis was based on the fact that Zimbabwean industry is relatively advanced compared with that in most countries in sub-Saharan Africa, particularly the metal working subsector, which forms the basis of a capital goods sector. Zimbabwe has an integrated iron and steel industry. Therefore, the limited participation of local industry to some extent reflects the lack of a procurement policy to promote local industry.
The situation at Hwange
In the late 1960s, the chairman of Wankie Colliery, Sir Keith Acutt, said in his annual report for the Anglo-American Corporation (AAC) that he was prepared to offer financial assistance to install a steam generating unit at Hwange. The chairman had predicted an electric power shortage "within a few years." The hydroelectric station at Kafue, in Zambia, was about to start. The same annual report showed that AAC's coal sales during that year had dropped by 10% to a low of 3 Mt. In addition, the chairman expected a further drop in coal sales to Zambia when the road lift to Livingstone ended and the Zambia Siankandobe Colliery came into production.
In August 1968, Sir Frederick Crawford, a director of AAC, made a strong plea for the construction of a thermal power plant at Hwange. He evoked both political and economic arguments and pointed out that Rhodesia needed "cheap power to continue to develop its primary and secondary industries." The establishment of the thermal plant "would be in keeping with the current trend for greater self-reliance in industry and mining, keeping us independent of external suppliers or pressures and would also be the mainspring for increased employment internally."
Like Sir Acutt, Sir Crawford could "foresee" a power shortage in the country by the 1970s. At that time the country's generating capacity, including half of Kariba's and all the thermal stations' production, totalled 690 MW. But Sir Crawford predicted that before the end of the 1970s, demand for electricity would exceed 1000 MW. He argued that the country electricity requirements (before the North Bank Station was built by Zambia) would call for more thermally produced power. If this was to be done cheaply, there was a strong case for centralizing generating capacity at the coal fields. However, no possibility for hydro schemes was considered.
The Minister of Transport and Power, Roger Hawkins, and ESC commissioned consultants to investigate the possibility of installing a large thermal power station at the Wankie coal fields. The consultants worked closely with AAC on the project. In 1972, the consultants recommended that a 1250 MW power station be constructed at the coal fields, and estimated that the cost of the power plant would be 240 million ZWD (in 1995, 8.51 Zimbabwe dollars [ZWD] = 1 United States dollar [USD]). Rhodesian industries, it was hoped, would receive massive orders for the construction and equipping the power station. Most transmission materials, including structures and conductors, were to be made in Rhodesia. Steel, cement, and engineering firms in the country were to make equipment for the boiler plant, and the electrical engineering sector would contribute auxiliary transformers and switch gear.
The recommendation of the consultants was accepted by ESC and approved by the government. Stage I (four 120-MW units) commenced in 1973/74. Civil engineering, mechanical, and electrical contracts were signed, and the work started.
In 1975, because of sanctions, the overseas contracts were deferred indefinitely. News about the project was unavailable because of a security blackout until 1980. In that year, the ESC general manager announced in the ESC annual report (ESC 1980) that almost 670 million ZWD had already been spent on the Hwange Thermal Power Station. He revealed that despite the indefinite deferment of overseas contracts that had occurred in 1975, "civil works continued unabated using local finance and materials, and the main structure, namely the turbine house cooling towers, chimneys, control and administration block were completed [by 1980]." The overseas contracts were resuscitated in January 1980.
When the project continued in 1980, it was estimated that additional costs to complete stage I would amount to 250 million ZWD, and an extra 350 million ZWD would be needed for stage II. Stage I, comprising four turboalternators with four boilers and an ancillary plant, was expected to produce a total output of 480 MW. In other words, each set of alternators would have a capacity of 120 MW. At that stage, the turboalternators and boilers, etc., had still to be manufactured, shipped, erected, and commissioned.
Stage II was to be much bigger, both in terms of financial investment and generating capacity. Its initial output was planned at 800 MW, with an option to extend it by another 400 MW. It may be useful at this point to compare the country's generating capacity at that time with the planned capacity at Hwange, to give some idea of the extent of the contemplated project. The total generating capacity of the country (excluding the Hwange project) stood at 960 MW, which was well below the planned capacity of Hwange (> 1200 MW.)
Since the Hwange project resumed in 1980, costs have gone up considerably. When news about the project was released in February 1980, The Sunday Mail reported that it would cost about 235 million ZWD to complete stage I and that another 350 million ZWD (at 1979 prices) would probably be needed for stage II. In April 1980, the ESC general manager announced that the total cost of the Wankie Thermal Power Station would be around 800 million ZWD. In August, the chairman revealed that construction costs for the station had soared to 1000 million ZWD.
The spiralling costs at Hwange were passed on to consumers. In early 1983, Central African Power Corporation (CAPCO), a statutory body constituted jointly by Zambia and Zimbabwe to be responsible for operating and distributing bulk electricity power supplies from all power stations in Zimbabwe, announced a 60% increase in the bulk-supply tariff in the fiscal year ending June 1984, when the full costs of stage I would be felt.
The increasing price of electricity could also have been partly a response to World Bank pressure. The chairman of the Harare City Council Finance Committee announced in January 1981 that the World Bank was pressing for a quadrupling of Zimbabwe's electricity tariffs within 3 years as a condition for granting World Bank aid for the construction of stage II. The World Bank representatives claimed that Zimbabwe's electricity was "ridiculously" cheap and electricity was a "luxury" fuel.
Because of increasing costs of constructing the power station, the government decided to reconsider whether it was really necessary to go ahead with stage II after the completion of stage I. In January 1981, the government commissioned a team of consultants to reappraise the future requirements for additional power and recommend the least costly method of providing it. The international consultants, Mertz and McLellan (M& produced six options for hydroelectricity developments and five for coal-fired thermal plants in a report presented to the Ministry of Industry and Energy Development. The report recommended that phase I of stage II of the Hwange project be undertaken and that the South Bank Power Station of Kariba be extended. Hwange phase I would consist of two sets, generating 220 MW each, and would cost about 188 million ZWD. The extensions to Kariba South would consist of two sets, generating 150 MW each, and would cost about 108 million ZWD. The recommendations were approved by the government, and construction was completed.
The decision by the Zimbabwean government to go ahead with the expansion of the Hwange Thermal Power Station was not welcomed by the Zambian government. Before the completion of stage I, Zimbabwe was importing 40% of its electric power from Zambia, at a monthly cost of 213 million ZWD. In fact, Zambia had developed a surplus of electric power prior to Zimbabwe's independence, which to some extent strained the relationship between the two countries, especially within the context of regional cooperation in economic development.
This brief historical description shows that the idea for the project originated with AAC, which was keen to exploit the huge resources of coal at Hwange. The self-interest of the company is borne out by the fact that the idea of a thermal power station was raised at a time when AAC's Wankie Colliery was suffering financially from declining demand, and further decline was expected. The power station would not only boost the demand for coal but constitute a steady, ready, and guaranteed large market for the AAC. In addition, the power station would use coal with a high ash content, a type that was being discarded but the ESC would still have to purchase.
Although the price of coal for the power station was still being negotiated in 1973, The Rhodesia Herald made rough calculations of the magnitude of gains that would accrue to AAC as a result of the power station. Making the assumption that the coal-price agreement would allow for a profit margin of $0.43/t, the article calculated that the working profit from coal mined for the power station would increase fivefold, from 32 000 ZWD in 1976/77 to about 1.7 million ZWD in 1982. The company would also benefit from lower unit-production cost because of larger scale operations.
The consultants who carried out the initial feasibility study for the project worked closely with AAC, whose interest was at stake. These consultants had carried out the more recent assessment of Zimbabwe's future power needs, with a view to finding the most economical way of meeting those needs. It should not come as a surprise that expansion of Hwange was recommended, without much attention given to some alternative sources of electricity supply, e.g., Cabora Bassa.
Contractual arrangement at the power station
To clarify the role of the consultants in the construction of the power station, it is necessary to provide a picture of the nature of the relationship between the Zimbabwe Electricity Supply Authority (ZESA), which controls the power station, and the consulting engineers and the contractors, that is, the companies involved in the construction of the project, whether local or foreign. This relationship has strongly influenced the process of technology acquisition, both at the power station and in Zimbabwean industries supplying inputs to Hwange.
The Hwange Thermal Power Station is owned by ZESA, a statutory body established by an act of Parliament. ZESA is vested with the powers of generating, transmitting, and distributing electricity in Zimbabwe. Before independence the power station fell under ESC. However, ESC did not have statutory powers to generate electricity in Zimbabwe. At that time, the organization of the power sector was fragmented, with CAPCO being solely responsible for electricity generation and transmission in the country. ESC and the electricity departments of the city municipalities of Harare, Bulawayo, Mutare, and Gweru were responsible for distributing electricity. This form of organization resulted in an anomalous situation: despite the fact that ESC owned and operated the Hwange Thermal Power Station (when it became operational), it did so on behalf of CAPCO - the only organization that could generate and transmit electricity - and then resold the electricity to ESC for distribution. The situation was corrected by the formation of ZESA in 1985/86, which took over ESC and acquired the electricity departments of local authorities.
When ESC originally constructed the power station, it appointed the M& as consulting engineers for the project, at both stage I and stage II. M& was very central to all the operations at Hwange, and for that reason, it is necessary to precisely define its position not only during the initiation but also during the construction and subsequent operation of the project.
When construction of the power station resumed after independence, after having been suspended because of sanctions, M& assisted ESC by preparing the documents necessary for ESC to apply for approval in principle of M& general proposals for the execution of the project. At the preconstruction stage, the duties of M& included the following:
· investigating data and information relevant to works that had been prepared by either M& or others;
· making any survey of the site that might be necessary to supplement information already available;
· advising ESC on the need to carry out any geotechnical investigations to supplement the information already available; and
· advising ESC on the suitability of persons or firms tendering and the relative merit of their tenders, prices, and estimates.
At the construction stage, M& was responsible for the following:
· advising ESC on the need for special inspections or testing;
· advising ESC on the appointment of site staff;
· preparing any further designs or drawings;
· examining contractor's proposals;
· preparing formal contract documents relating to accepted tenders for inspecting and testing during manufacture and installation of electrical and technical machinery and the plants supplied for incorporation in the works;
· arranging and witnessing efficiency and acceptance tests on site to ensure that the project was executed according to the contract and in accordance with good engineering practices;
· checking contractors' claims and issuing certificates for payment to the contractors;
· delivering to ESC the records and manufacturer's manuals needed to operate and maintain the works; and
· advising on disputes or disagreements between ESC and the contractors.
In addition, M& coordinated the transportation of all equipment and materials to Hwange and had to ensure that delivery was made by the contractors in the most efficient, economical, and practicable manner. M& gave all the necessary instructions and supervised the construction of power station.
The copyright on all drawings, reports, specifications, bills of quantities, calculations, and other similar documents provided by M& (others were supplied by contractors) would remain M& for the duration of the agreement and for 12 months thereafter, although ESC had a licence to use such drawings and other documents for the purposes of constructing the power station. After 12 months, the copyright would belong to ESC.
It should be emphasized that the position of M& vis-Ã -vis ZESA has not been static. For a long time, M& had held the monopoly on all engineering consultancy in electricity generating and transmission in the country. However, now ZESA is beginning to build capabilities within itself and is taking steps to improve its contractual relationship with M& It was almost natural and automatic that M& would be the consulting engineers in any project undertaken by ZESA. But in their contract on the appointment of consulting engineers for the Kariba South extension, ZESA made it clear that the appointment of M& would terminate with the completion of phase I and that ZESA had no obligation to appoint the same consulting engineers for phase II. M& had to accept that ZESA might issue M& enquiry documents from Kariba to any other consulting engineer(s) appointed for phase II.
Nature of the contracts
This section discusses some of the conditions in the contracts between the contractors and ZESA. The contracts were fairly standard, and discussion will focus on the common issues bearing on the development and acquisition of technology at the power station and in the relevant subsector of Zimbabwean industry. Again, it will be clear that M& role was of critical importance.
When a contract was signed, all the work was to be done according specifications or to the reasonable satisfaction of the consulting engineers. M& was entitled, at all reasonable times during manufacture, to visit the contractor's premises to inspect, examine, and test the materials used by, and the performance of, the contractor or subcontractors. After manufacture, components of the plant were delivered to the site, with authorization from M& Once the work was complete and tested, the M& issued a take-over certificate.
In general, the contracts were very specific about the work to be done and the quality specifications. Contracts usually required the design of any work to ensure satisfactory operation under the atmospheric conditions prevailing at the site. Continuity of service was the first consideration, so the design had to facilitate inspection, cleaning, and repairs.
Some months before the completion of the plant, M& was to be supplied with copies of general instructions for operating and maintaining the plant. Operating instructions had to detail all normal start-up, running, and shut-down procedures, emergency operating procedures, and any recommended precautions to prevent the plant from deteriorating during periods of nonoperation. The maintenance instructions had to include a schedule of spare parts, with reference numbers and procedures for ordering replacements. On completion of the contract the contractors were obliged to furnish M& copies of all final drawings needed for the efficient maintenance of the plant and for all the parts to be dismantled, reassembled, and adjusted. Depending on the complexity of the work, the contractor was obliged to keep a competent representative at the power station for some time after a take-over certificate was issued.
A picture of the power station
This section describes the actual working of the Hwange Thermal Power Station. This should provide the nontechnical reader with an insight into what happens in thermal power generation.
The Hwange power station can be broadly divided into three major components:
· a boiler section, consisting of coal feeder mills, primary air fans, induced-draft fans, forced-draft fans, and air-seal fans (secondary air burner, oil burners, pulverized fuel burners);
· a turbine section, comprising turbine, condenser, extraction pump, feed heaters, air injectors, auxiliary steam manifold, boiler feed pump, and de-aerator; and
· auxiliaries, made up of compressed-air system, ash plant, coal plant, water supply system, water treatment plant, hydrogen-generation plant, cooling water system, and fire-fighting system.
The coal used in the power station is transported from the opencast mine of Wankie Colliery by a conveyor-belt system to the coal store. From there, it is carried again by conveyor belts to boiler bunkers for storage. In the conveyor system, the coal is guided from one belt to the next by chutes. From bunkers, the coal is transferred to the volumetric feeder, which feeds the coal mills (pulverizing mill) at a controlled rate. The coal mill is very important: this is where the coal is ground into a very fine powder - pulverized fuel - before it is sent to the boilers. The quality of the pulverization should be high for efficiency of operations. If the pulverized coal is coarse, there will be a high rate of wear and tear on the pipe system.
On start-up of the boiler, the pulverized coal is ignited by oil burners. Air is drawn from the top of the boiler house by forced-draft fans and passes through an air heater into the combustion chamber; it is drawn off and blown by the primary air fans through the mills to convey the pulverized coal to the combustion chamber.
The combustion chamber is completely lined with water wall tubes. The water heated in these tubes passes to the water-and-steam drum, where steam is separated and then travels to the super heater, where its temperature is raised further. From there it is supplied to the turbine, through interconnecting pipe work. The steam has a pressure of 8.9 MPa and a temperature of 518°C. The steam passing against the turbine blades causes the turbine to rotate (controlled by its governor at 3000 rpm).
The operational efficiency and life span of the turbines can be affected by moisture. High-pressure valves control the water level in the boiler drum, which is equipped with gauge glasses for monitoring the water and steam levels. If the water level in the boiler is too low, the water level in the pipes along the boiler will be too low and the high temperatures in the boiler will melt the pipes. On the other hand, if the water level in the boiler is too high not enough high-pressure steam goes into the turbine and the water may damage the turbine blades.
The turbine is coupled to the generator, the rotor of which is large electromagnet, whose rotation produces an electric current in the copper winding of the stator. This electric current is fed to the national grid through a transformer, which increases the voltage of the electricity produced.
After passing through the turbine, the steam, now at low pressure and temperature, reaches the condenser, where it is condensed back into water as it passes over a number of tubes in which cold water is circulating. This process warms the water in the tubes. The water is cooled down again for further use by being sprayed into the lower levels of the cooling tower. An upward draft of the air within the tower cools the warm water as it falls to a pool at the bottom. From this pool, it is pumped back to the condensers.
The condensed steam, meanwhile, is pumped by an extraction pump through low-pressure heaters to the derider, where dissolved oxygen is removed to prevent corrosion of metals in the boiler. It is then sent by the boiler feed pumps through high-pressure heaters and an economizer to the steam drum, where it enters the water wall tubes as part of this continuous cycle.
The flue gas leaving the combustion chamber passes over the superheater, economizer, and air heater, giving up heat, and then to the precipitator, where dust particles are removed. The gases are drawn through the boiler by the induced-draft fans and discharged into the chimney. Coarse ash is collected in an ash hopper under the combustion chamber, and fine ash is collected in the precipitator hoppers. This ash is conveyed hydraulically from these hoppers to the disposal area.
Major suppliers and contractors
An interesting feature of the Hwange Thermal Power Station is the large number of contractors who participated in its construction. Table 1 lists the companies that won major contracts. These firms also subcontracted portions of their works.
From Table 1, it is clear that construction of the power station involved companies from many countries. Local companies were very much involved in the civil engineering works. Local companies like Roberts Construction and Belmont– Glendinning won the housing and extension services contracts; WJ & RL Gulliver received the contract for the construction of the ash dam; and Grinaker, in a joint venture with Roberts Construction, constructed the main foundations and the superstructure of the power station.
The involvement of local companies in the civil engineering reflects the development of the country's capabilities in this field. However, the mechanical engineering, electrical engineering, and transmission contracts went mostly to foreign contractors, although some went to local companies, such as Bestobell (ventilation and air conditioning), Drake and Scull (vacuum cleaning plant), South Wales Electric (auxiliary transformers), and HWS Constructors (lighting). Different companies were contracted for similar sections of stage I and stage II of the power station. For example, ICAL (South Africa) constructed boilers in stage I, whereas those in stage II were constructed by Babcock Power (United Kingdom). MAN (Germany) was the major contractor for the turbine sections in stage I, whereas KVS (United States) was responsible for the same section in stage II. It is also interesting to note that the sources of financing were mainly the World Bank and the constructors themselves.
Design of stages I and II
The design of stage I was outmoded, especially that of the coal mills. This is partly explained by the fact that the construction of this stage of the power station was postponed by almost a decade. The power station was supposed to have been operational by about 1972. The stage I coal mills are not only old fashioned, but also technologically complex and difficult to maintain.
The stage II mills are more modern but use a far simpler technology. Each stage II mill consists of a big container with mill balls. Coal goes into this container, which rotates; the coal and the hard steel balls hit each other, and in this way the coal is ground. These steel balls are easy to manufacture, requiring only very hard steel.
The process in stage I is different. In each mill, there are two huge rollers on a table. As the table rotates it turns the rollers, crushing the coal. Altogether, the stage I mills have 64 segments for the tables and 32 roller tires. Table segments take about 1 year to wear off, and rollers take about 6 months. Certain parts of the hydraulic system have to be imported from South Africa.
The power station is currently using diesel oil for start-up. Power stations elsewhere use light oil for start-up, then switch to medium oils and then to heavy oils to correct flame stability. Heavy oils are cheaper than diesel, but if heavy oils are to be used, it will be necessary to install heaters to heat the oil to increase its viscosity.
Modifications to the mill
The hardness of the coal is a factor that should have been considered when the material for making rollers and the rotating table were chosen. The mill is designed to reject hard foreign bodies, so hard coal will also be rejected. When the stage I mills were put into operation, they had a very high rate of rejection of coal, which was very uneconomical, taking into account the cost of purchasing the coal and transporting it through the conveyor belt system. There was also a high rate of wear and tear on the armoury, which led to leaking of the pulverized fuel.
Modifications were made to reduce the amount of rejected coal and to reduce wear on the armoury. The gap in the valve that injects air into the mill to carry the pulverized fuel had to be reduced. The wear on the armoury occurred because some foreign particles and heavy coal remained suspended, continuing to butt against the armoury, before eventually falling down the rejection route. The valve modification increased the velocity of the air. Particles were blown back rather than left suspended, with the result that the rejection rate was reduced to negligible levels and the life span of the armoury was increased. However, it meant that the mill was forced to grind almost everything, but consumption remained at acceptable levels.
The original suppliers came up with their own modifications. First, they reduced the distance from table to top ring. This reduced the amount of coal between table and roller, which reduced the power consumption in the motor. Second, they changed the shape of the armoury.
Conveyor belts transport the coal from the opencast mine to the power plant. Chutes direct or guide the coal from one belt to the next belt, but the chute system was not well designed because the chute plates wear out quickly. The chutes had to be redesigned. First, a Zimbabwean company analyzed the material composition of the plates. Then drawings were made for a local company to do the manufacturing using harder steel which does not wear so easily.
In addition, the system of pipes carrying pulverized fuel was wearing out at a much faster rate than expected, particularly in the corners. Either the material composition of the pipe system failed to meet specifications or the specifications were not high enough. Different material was recommended for a trial, and two corners were reconstructed with the new material. The boiler was run to see if the new material performed better than the old.
Availability of spare parts and consumables
At initial installation and test runs, maintenance costs for a power station are relatively high. Obviously, at the initial start-up, problems will be experienced, and these may be caused by the use of components that do not meet the required specifications and the operators' lack of familiarity with the plant. As adjustments and corrections to components are made and operators gain more experience with the plant, running costs are reduced. Eventually, the station gets to a point where it begins to operate smoothly, running costs reach a stable minimum, and the technicians become experts. However, as the equipment ages, breakdowns are more frequent, operational efficiency goes down, and average running costs start going up. At this stage, the availability and smooth procurement of spare parts and consumables become extremely important.
Spare parts: Spare parts for the boiler feed pump include the following: bearings, balancing springs and piston, pump impellers, couplings, valves, gland packing, joint gaskets, volume-to-volume seats in feed pump connections. There have been many leaks in valves, and the problems appear to be in the design; material composition may be different from that prescribed in manuals.
Spare parts for the fuel-oil system include bearings, safety valves, and screws for pumps. Problems were experienced with bearings, and the station fabricated some at the workshop, but they do not last. The problem is likely to be in the material. Oil burner hoses, which connect the oil pipe to the burners, are imported. Field and Technical Services is trying to manufacture parts for repairs. For the life span of the power station, which is projected to be 40 years, 2560 burners will be required. Gaskets are supplied by Bestobell. Electrical cords are imported - they cannot even be repaired locally and are actually sent back to the original manufacturer for repairs. NEI Central Africa (part of ICAL, which built the boilers) supplies Hwange with boiler parts. It orders from Kent.
If the system of pipes carrying pulverized fuel wears out, parts can be obtained from O'Connolly, which has already manufactured them.
The turbine lifespan is long, and no problems are expected in the first 20 years. IPTC recently formed a company in Harare to supply turbine parts and has a franchise with the manufacturing company. Other turbine parts will have to be imported, though, and so will high-pressure vessels and high-pressure valves. However, 20 years is a long time, and with planned industrialization programs, the plant may acquire its own capabilities in this field. Low-pressure valves can be obtained locally, and it may be possible to encourage some local companies to manufacture high-pressure valves for the water-pumping station from the Deka line.
Some of the turbine pumps can be manufactured locally, but boiler-feed pumps are complicated and may have to be imported for a long time to come. The ash-slurry pump and cylinder grinders will be manufactured locally by O'Connolly (drawings have already been submitted).
Consumables: We now turn our attention to consumables - propane gas, hydrogen, carbon dioxide, methanol oil, and asbestos packing - and some of the problems the power station faces in the procurement of these.
Propane gas, which is used for lighting burners, is ordered from South Africa. The power station sends the cylinders to a company in South Africa, where they are filled and sent back. However, the company faces foreign currency problems and often fails to meet the required orders in time or in sufficient qualities. Oxyco, in Harare, refills hydrogen and carbon dioxide cylinders. However, it can only do about 12 cylinders at a time. This creates problems: at times, the power station may require as many as 24 cylinders all at once. Methanol is imported from South Africa through Chemplex (Bulawayo). When there are delays in supply and, hence, a shortage of methanol at the station, more hydrogen will be used. In the absence of unforeseen circumstances, it takes about 2 months to get methanol from South Africa.
Oil is one of the biggest problems, given the high consumption at the power station. The station uses HHP 46 oil, which is not available from Shell BP. The firm does have total substitute oils and is prepared to guarantee their efficient performance, but it insists on a contractual arrangement.
Asbestos packing is imported, although Zimbabwe produces and exports asbestos - it is used throughout the country in all industries that use steam. What is required is the machinery and technology to compress the packing. ZESA imports the packing through Bestobell; however, a role of asbestos blanket, about a half metre thick, was 2000 ZWD in 1986.
The power station has a workshop that mainly does maintenance. It is equipped with machinery imported from the United Kingdom, the United States, and South Africa. It has bending machines, a circular-bend saw, surface grinders (different types), lower press, bench drilling machines, reciprocating hacksaws, lathes, vertical drilling machines, and milling, rolling, slotting, and shearing machines. The workshop is capable of undertaking repair work on its own machinery but has to purchase consumables, such as drills, saws, and blades. Because of the shortage of consumables in the workshop, some machinery lies idle for long periods, an inefficient use of the huge financial resources that were invested in purchasing the machinery.
The human resources at Hwange Thermal Power Station at its inception were predominantly foreign. Engineers and technicians were recruited from the United Kingdom; artisans and plant operators were recruited from India. The massive recruitment of foreign personnel even at low skill levels was justified by the size of the Hwange Thermal Power Station; existing power stations in the country were smaller.
In keeping with the government's policy of reducing dependence on expatriate labour, ZESA embarked on a concerted drive to recruit and train local personnel. Training, in general, is going on fairly smoothly. Within a period of 3 years, the number of Zimbabwean engineers increased from 3 to 60. The majority of the graduate engineers have general engineering training, and most acquired the relevant skills to be promoted to positions of responsibility.
At the time of this study, all but 10 unit operators had been replaced by Zimbabweans.
Technical development: In anticipation of the large training requirements for technical personnel, ZESA established a training school at the power station. It would have been ideal for the first-year apprentices at the power station to spend some time acquiring theoretical knowledge, which they could then apply on their jobs. Unfortunately, the local technical colleges were not fully equipped to offer specialized training for the electric power sector. The government, therefore, gave ZESA (then ESC) the mandate to work with ElectricitÃ© de France to develop a training system for the electricity sector in Zimbabwe. This led to the building of the training school in Harare, which accommodates 220 students. Unfortunately, the training school at Hwange was not very useful because there was a shortage of staff.
As a result, first-year apprentices engaged at the power station were without theoretical training. It became very difficult to provide the apprentices with systematic training: the training was determined by the specific circumstances and problems at the power station at any given time. The major problem with the on-the-job training was the language barrier - foreign workers preferred to communicate in their mother tongue. This became an obstacle to Zimbabweans actively seeking to acquire certain skills.
Zimbabweanization: Zimbabweanization of the power station has been taking place slowly because of the high staff turnover, mainly a result of salary differentials between parastatals and the private sector and between Zimbabweans and foreign staff. The salaries of foreign staff are about three times those of Zimbabweans employed at the same levels and with equivalent academic and professional qualifications and experience. In addition, the foreign staff enjoy other privileges, such as company cars and a holiday ticket to their home countries. The frustration faced by qualified Zimbabwean engineers, technicians, fitters, and others has led them to leave for the private sector. The search for greener pastures has assumed a new dimension in recent years, with several qualified personnel crossing borders to such countries as Botswana and South Africa.
The instrument maintenance department, in particular, has faced problems in recruiting, training, and retaining Zimbabweans and is, therefore, dominated by foreign staff. The difficulties in recruiting Zimbabweans in this department arise from the fact that no other company in the country has a range of instruments like that at Hwange. To make matters worse, even the established colleges in the country have problems training instrument technicians.
International structure of the power-equipment industry
To establish the role Zimbabwe plays in supplying the needs at Hwange and the potential for developing local capabilities in the manufacture of power equipment, it is necessary to get a clear picture of the international structure of the power-equipment sector. A country's ability to enter this industry is determined not only by conditions internal to the country but also by international realities and constraints.
A review of the international power industry also helps us identify problems likely to be encountered by any nation attempting to develop this sector. International experience is a source of lessons and strategies.
Structure of the industry
The market for heavy electrical equipment is a very imperfect one. On the supply side, 12 transnational corporations (TNCs) (based in developed countries) and their subsidiaries and affiliates account for a large share of total world production and trade in this industry. According to Surrey and Cheshire (1972), there are about 250 manufacturers of power and distribution transformers in the world. These manufacturers employ about 720 000 people, 75% of whom are employed by 10% (25) of the firms, and these firms account for all the exports. The leading companies in the power industry include General Electric and Westinghouse (United States), General Electric (United Kingdom), Siemens and Allegencine Electricitate Gesellschaft (age) (Germany), Hitachi (Japan), and Brown Boveri (Switzerland). Other French, Japanese, American, Swedish, and Italian companies participate but in more specialized lines.
Production of large units is highly concentrated in the leading firms, and these firms dominate the world market. These firms enjoy considerable technological advantages in the production of turbogenerators, turbines (both steam and gas), and high-pressure pipes. Gas turbines, which require specialized technologies, are produced by, or under the licence of, General Electric, Westinghouse, and Brown Boveri. But in smaller plants, the technology is more accessible, even to producers in some developing countries.
All the dominant power-equipment manufacturers were established during the early development of the industry and contributed considerably to it. These firms devote large sums to sustaining research and development (R& which has led to considerable technological innovations. Further, technological capabilities have been acquired by international cross-licencing among the leading companies. The lead in technology has strengthened the position of the established firms and discouraged entry by newcomers.
In Europe and Japan, a major factor in development of the power sector was the acquisition policy of power parastatals, which guaranteed protection to local industry and virtually excluded imports of equipment. Further, in most cases, the companies concerned received full backing from their governments in several ways:
· Governments supported the industry by funding R& governments granted local private companies long-term purchase guarantees for electrical equipment.
· Other governments provided manufacturers access to expensive testing equipment at subsidized rates.
· Governments encouraged mergers in the industry when overcapacities developed.
· Governments encouraged and supported exports by giving loans to other countries under the condition that those countries purchase power equipment from the donor countries.
An important feature of the power-equipment sector is the collusion or collaboration among the leading producers. Until the 1930s, the companies used patent pools to divide the international market among themselves. These were later replaced by a formal cartel, the International Electrical Association. Most of the European producers are members. The cartel members have a system of sharing export markets, which are the developing countries.
There are also economic factors that help to explain why the industry is dominated by a few large producers. A study by UNCTAD (1978) points out that the purchasing policies of most public utilities appear to place considerable weight on the technical standards of the equipment, the prestige of or previous commercial relations with the supplier, and delivery conditions. The price appears to be only of minor importance - demand for electricity tends to be price inelastic, thus enabling the utilities to pass on high costs to consumers. Product differentiation and the loyalty of consumers to the products of existing firms act as barriers to new firms. Other barriers exist in the form of absolute cost disadvantages because existing firms possess secret know-how. In addition, the financial requirements for entry into this industry are extremely high.
On the supply side, because of the irregular nature of demand for electrical equipment, the high fixed-cost structure of the industry, and falling demand, the industry has been characterized by overcapacity since the 1960s. The resources required for investment in special machinery and testing equipment and the long gestation period to capitalize on such investments discourage new entrants into this industry. This situation is reinforced by low demand relative to existing international capacity.
What prospects do developing countries like Zimbabwe have for developing local capabilities in this line of production? Historically, TNCs have established sales offices in developing countries; in some cases, the TNCs have also set up local assembly operations for power equipment. In some large developing countries, TNCs have responded to import-substitution policies (which shift the emphasis from imported inputs to locally manufactured substitutes) by expanding their assembly operations to include manufacturing facilities. However, in most cases, the manufacturing has been small scale. Where medium-sized equipment has been produced, this has been done with a high import content. A few developing countries and newly industrialized countries, such as Brazil, Argentina, India, and the Republic of Korea, have made significant progress in the manufacture of large power equipment.
Policy implications and recommendations
Diversity of suppliers
Because Zimbabwe is a developing country that is still trying to consolidate and develop its industrial base, it is recommended that, for projects such as the Hwange Thermal Power Station, it narrow its range of suppliers. Of course, this calls for careful screening of tenders at an early stage, giving serious consideration to issues such as quality, price, and the involvement of local industry through subcontracting. The benefits of narrowing the range of suppliers are twofold. First, problems in procuring spares internationally are reduced; second, the learning process will be much easier for local technical staff.
Difference in design
For Zimbabwe, which has a limited market, it is wiser to go for standardization of design. This provides a wider scope for local industry to either diversify or invest in new lines to respond to a large demand, unlike a situation with different designs, which leads to limited market opportunities for a wider range of products. Therefore, what emerges from this study is that if a number of similar projects are to be undertaken in Zimbabwe, then the design of these projects should be similar to allow domestic industry to reap maximum benefits.
We now turn our attention to international bidding. This is rather complex, since there is a need to balance the short-term price and the long-term benefits of developing local industry while conducting checks to ensure the efficiency of that industry. The very existence of World Bank guidelines, which provide for a 15% domestic preference margin, is a realization of the long-term benefits likely to accrue as a result of giving preference to local companies, especially in developing countries. Zimbabwe should deliberately give preference to domestic suppliers where the long-term benefits exceed the short-term costs.
Development of local capabilities
The recommendations concerning the development of local capabilities are directly derived from the experiences of those countries that have managed to develop the power-equipment sector. Those countries entered the power-equipment industry through a very deliberate planning process. This process involved government assistance, such as providing services that are too expensive and too essential to depend on the profit motivation of private companies. The government provided testing equipment at subsidized rates, protected domestic industry, guaranteed orders, and funded R& of the international structure of the power-equipment industry, an open market approach will not enable Zimbabwe to enter this sector. Therefore, it is recommended that the government should actively assist the industry in developing capabilities along this line.
Unpackaging is obviously desirable because it provides the potential for local industry to get into those fields that are less technologically complex. The benefits of unpackaging are evident at two levels: the foreign-exchange requirements for imports for both construction and spare parts are reduced; and unpackaging allows for easier learning and acquisition of technology. The study, thus, recommends that in cases like the Hwange project, where contracts are very detailed and specific, Zimbabwe should take advantage of this and have those components manufactured by local industry.
Transparent technology policy
Up to now Zimbabwe does not have a clear technology policy. A document was drafted for discussion about 5 years ago (Government of Zimbabwe), but the outcome is not clear. Government does recognize the importance of building a strong domestic technological base and, hence, the importance of having a technology policy as a guide. Because Zimbabwe does not have a transparent technology policy, it is not surprising that the government makes decisions that are very inconsistent and that, at times, actually undermine progress in developing the local technological base. To avoid this, it is important for government to draw up a clear technology policy, which will be a basis for all decisions related to technology.
Implications of the Economic Structural Adjustment Program
The recommendations of this study should be viewed in the context of the general thrust of current government policy. Government has decided to embark on the Economic Structural Adjustment Program (ESAP), to be phased in over a period of 5 years, beginning September 1990. The adoption of ESAP reflects a change in the government's philosophy of development. The major element of ESAP is trade liberalization. There are other policies accompanying this, but these are mainly aimed at ensuring the success of trade liberalization, which reflects the government's determination to steer the economy according to an export-led growth strategy. The complementary policies include deregulation in labour laws, price controls, and investment procedures. However, the bottom line of ESAP is that government has adopted the open-market system to determine resource allocation.
This raises a question about some of the ESAP policies and the applicability of the recommendations of this study to ESAP. The very phasing in of ESAP over a period of 5 years reflects the government's uncertainty about its sequencing of the program. Also, ESAP is very general, especially the policy for trade liberalization; this allows for flexibility and provides room for further contributions to the ultimate design of the program. As the Government of Zimbabwe is committed to ESAP and its underlying philosophy, it follows that some of the recommendations emerging from this study would require a certain time frame; this applies mainly to issues such as protecting and giving preference to domestic suppliers and providing assistance in the form of subsidized testing equipment. It is important to note that such measures are compatible with ESAP if it is aimed at developing local industry (and, of course, the rest of the economy). The recommendations of this report should be viewed as inputs to ESAP, aimed at ensuring that the program in no way unduly suppresses local industry, which can become competitive with a protected learning process.
Government does not have a clear procurement policy designed to develop local industry. As a result, the participation of local industry in the Hwange Thermal Power Station project has been limited, especially in stage II and in components other than the civil engineering works. Again, because of lack of policy, the government failed to take advantage of the detailed and specific nature of the supply contracts that gave scope for unpackaging.
Decisions regarding plant size and plant design should have been based on the need to develop local industry. It should, however, be pointed out that ZESA is now making every effort to reduce dependence on overseas suppliers and rely on local industry for spare parts and consumables.
The contracts between ZESA and the suppliers were drafted in a manner that ensured good work and was conducive to effective technology acquisition, especially skills related to operating and repairing the plant configuration. ZESA established a training school in Harare, and it is also sponsoring engineering students at the University of Zimbabwe. Unfortunately, ZESA is experiencing problems retaining skilled human resources. Although training is vital, staff retention is equally important - because it is usually the experienced and more capable personnel that tend to leave for greener pastures. Therefore, a comprehensive human resources development program should address issues affecting staff retention, mainly a matter of salaries, fringe benefits, and other working conditions.
· ESC (Electricity Supply Commission). 1980. Annual report for 1980. Government Printers, Harare, Zimbabwe.
· Government of Zimbabwe. 1982. Three-year Transitional National Development Plan 1982/83–1984/85. Government Printers, Harare, Zimbabwe.
· --- 1986. First Five-Year National Development Plan. Government Printers, Harare, Zimbabwe.
· --- n.d. African alternative to structural adjustment programmes for socio-economic recovery and transformation - Growth with equity: an economic policy statement. Government Printers, Harare, Zimbabwe. UNECA E/CA/CM.15/6/Rev.3.
· Surrey, A.J.; Cheshire, J.H. 1972. The world market for electric power equipment. Science Policy Research Unit, University of Sussex, Sussex, UK.
· UNCTAD (United Nations Conference on Trade and Development). 1978. Energy suppliers for developing countries: Issues in transfers and development of technology. UNCTAD Secretariat. TD/B/C.6/31.