Energy and Power Development Minister Dr Samuel Undenge has summoned the Zimbabwe Power Company to justify reasons for paying controversial businessman Wicknell Chivayo’s Intratek $5 million for the 100 megawatt Gwanda solar project in the absence of a performance guarantee to safeguard public funds.
Dr Undenge, who was last week quoted as saying ZPC tenders were aboveboard, yesterday made a U-turn in the wake of the exposure of irregularities by The Herald saying there was need to get to the bottom of the matter and take action on officials who bungled on the $200 million project.
The performance guarantee would have given ZPC room to recover its money in the event Intratek defaulted on the contract.
As it stands, the Zesa Holdings subsidiary has nothing in place to cover the risk. Initially, Dr Undenge had been accused of pushing ZPC officials to make the payment in the absence of a bond.
“These are public funds and they must be safeguarded at all costs. Action will be taken on whoever would be found wanting. I have summoned the ZPC management to come and explain how this was made possible,’’ he said.
“I am also meeting the ZPC board, which appears to have been kept in the dark to get its side of the story. The ZPC management tried to explain why they released the money without a bond but that is not satisfactory. I will only be fully equipped with information after meeting the board tomorrow (today) morning.”
Dr Undenge added: “After that I will then issue a statement because as the minister superintending over such big projects, I cannot go quiet after realising there is a problem somewhere.
“Energy is one of the key drivers of the economy and as such, we have to get to the bottom of the matter. In any case, these projects run into millions of dollars.”
In the absence of a performance bond, ZPC management was supposed to inform its board before releasing any cent but the panel was by-passed.
ZPC is headed by Engineer Noah Gwariro.
Zesa Holdings and the ZPC board are jointly calling for an audit of all power deals involving Intratek.
The private firm has also been awarded tenders to construct the 30MW Gairezi hydro power station at a cost of $128 million and upgrade Munyati power station for $113 million.
The $5 million released to Chivhayo without a bond was supposed to cover feasibility studies, topographical survey, boreholes, clearance of site, the geo-technical survey, fencing of the site, way leaves and administrative structures.
Only feasibility studies, borehole siting surveys and the topographical survey have been done.
According to documents gleaned by The Herald, the contractor should provide a performance guarantee and an advance payment guarantee.
Reads the documents: “The contract includes a clause to protect the client against losses incurred in case the contractor fails to perform as per clause 4.2 of the FIDIC Silver Book (contract book). The contractor will provide performance bond with a value equivalent to 10 percent of the contract price.
“The contract allows for an advance payment guarantee where the contractor requests an advance payment for mobilisation (on site). The advance payment is 30 percent of the contract price and is paid upon the employer receiving an advance payment bank guarantee. Under the requirement, the contractor is expected to procure and provide the guarantee at their own cost.”
The ZPC board met last Thursday and spent the whole day discussing the Intratek issue with some board members calling for the suspension of officials involved.
This comes as Government is working on a new law called the Public Sector Corporate Governance Act that will see corruption and other related maladministration in the public sector being punishable at law.
The new law, which is likely to be effected next month, would largely incorporate recommendations made in the National Code for Corporate Governance that was crafted by Government and the private sector in 2014. herald