Zimbabwe has signed a $400-million agreement with China's Sinohydro to expand its Kariba hydro electricity plant, reports Reuters.

The Zimbabwe Power Company says Sinohydro would add two 150 megawatt units at Kariba. The country generates a total of 940 MW from its Hwange thermal plant and Kariba, against the peak demand of 2 500 MW.

The state power generator says only two of six units were running at Hwange, which was hit by a complete power failure in February but the station should generate 560 MW by the end of May.

After years of hyperinflation and contraction, Zimbabwe's economy has stabilised under a power-sharing government formed last year by President Robert Mugabe and his rival, Prime Minister Morgan Tsvangirai.

But power shortages threaten a full recovery of the economy as the key mining and manufacturing sectors, which require reliable power supplies, continue to experience frequent cuts.