The China Export and Import Bank and Zimbabwe have signed a $319 million deal to finance the expansion of the southern African country's hydro power station.
The expansion of the Kariba Power Station, which would entail the addition of two power generating plants, will take four years to complete.
The Chinese loan has a two percent interest rate in addition to a five year grace period and 20 year tenure.
For us the energy deficit has hamstrung the growth of our economy
On its part Zimbabwe will contribute $35 million to bring the total cost of the project to $354 million.
Finance Minister Patrick Chinamasa signed on behalf of the Government, while China Exim Bank vice president Zhu Hongjie represented the bank.
"Under this arrangement, the bank will provide funding amounting to $319, 5 million — representing 90 percent of the total project cost — while the government, through the Zimbabwe Power Company (ZPC) will finance the 10 percent balance amounting to $35.4 million," Chinamasa said.
"This should go a long way in reducing power outages that characterise our power generation.
"For us the energy deficit has hamstrung the growth of our economy."
China's Sinohydro won the tender for the expansion work in December last year.
The firm has an option of sub-constructing building of the two units.
Zhu said the project should be completed on time and with good quality to "bring benefit to your people".
ZPC last year signed the agreement for the project with Sino-Hydro, an engineering, procurement and construction company.
But a debt of over $25 million owed to China Exim Bank by the Industrial Development Corporation and Farmers World Holdings stalled conclusion of the funding agreement as the two firms were supposed to clear the debt first before new funding could be availed to Zimbabwe.
Zimbabwe's electricity generation capacity is about 1 200 megawatts against a peak demand of over 2 200 megawatts and the new project is set to reduce the severe electricity shortages.