Zimbabwe’s coal-fired Hwange power plant is expected to start operating at full capacity by October, Namibian Energy Minister Isak Katali said.

The two southern Afircan countries signed an agreement in 2007 for the supply of 150 megawatts of power from Hwange in southwestern Zimbabwe to Namibia over five years. In return, state-owned Namibian Power Corp. loaned the Zimbabwe Electricity Supply Authority, or Zesa, $40 million to help refurbish four units at the plant.

The Namibian newspaper and other domestic media reported last month that Zimbabwe was considering shutting down Hwange and suspending power supplies to Namibia. Katali told lawmakers yesterday that Zimbabwe has denied the reports and has pledged not to renege on the 2007 accord.

“The Zimbabwean government has strongly refuted the above allegations as devoid of any truth,” Katali said in the Namibian capital, Windhoek. Zimbabwean officials “informed us that the Hwange power station will be returned to full production capacity by October 2010,” he said.

Hwange currently produces 50 megawatts of electricity, compared with the 920 megawatts it can generate when operating at full capacity. Zesa, the state-owned utility, has blamed the low output on coal shortages and old equipment. In February, Finance Minister Tendai Biti allocated $10 million to Zesa to “kickstart” repairs at Hwange, the Harare-based Herald newspaper reported last month.

Zimbabwean Commerce and Industry Minister Welshman Ncube said today he “hadn’t heard” that Hwange would be fully operational by October.

“Basically we need finance of about $132 million or so” to repair the plant, Ncube said in a phone interview from Harare, the Zimbabwean capital. “We have been getting different stories about the problems at Hwange from Zesa and we are in the process of assessing just what needs to be done.”

Zimbabwe currently relies on its 720 megawatt Kariba hydropower plant and imports from neighboring Mozambique, Zambia, South Africa and the Democratic Republic of Congo for electricity. The southern African nation requires about 2,000 megawatts of power to function without cutting supplies to consumers.

Zesa Chief Executive Ben Rafemoyo wasn’t available to take calls, his office said when contacted today for comment.

By Bloomberg