Tuesday, 3 September 2019

ED'S US$5,2 BILLION COAL PROJECT STALLS


PARLIAMENT yesterday grilled Finance ministry officials over a US$5,2 billion coal project spearheaded by Verify Engineering which failed to attract investors due to the poor investment climate prevailing in the country.

Last year, President Emmerson Mnangagwa announced that he had clinched a US$5,2 billion coal-to-liquid deal with South African investors, but up to now the financiers have not showed any seriousness due to the poor investment climate and regulations in the country.

Director of public sector investment programmes in the Finance ministry, Fidelis Ngorora and joint ventures unit director Graciano Nyaguse appeared before the Daniel Molokele-led Parliamentary Portfolio Committee on Higher Education, where they were asked to explain why the project had stagnated.

The Verify Engineering project was initiated by the Higher Education ministry to promote research and development.

Molokela expressed dismay at the lack of seriousness in implementing the project, saying: “As Zimbabwe, we have not been taking seriously the advancement of technology which can actually reduce our import bill, and we are told that Verify Engineering is not well-funded, yet there are a lot of low hanging fruits. This is a big issue right now since there is shortage of foreign currency and yet we are spending a lot on gas, electricity and fuel imports instead of developing our own technologies.”

He said currently, Zimbabwe was getting hospital gases from BOC Gases, a foreign company when Verify Engineering had the capacity to produce gas. Verify Engineering, he also said, had the capacity to develop a 600 megawatt Mkwasine Power Plant for electricity as well as convert coal to fuels.

Ngorora said the project had failed to attract investors.

“If you look at the annual budgets by the Ministry of Finance (2017 National Budget was US$4,7 billion), it will take us two to three years to leave funding of everything else and fund this project. We funded establishment of Mkwasine coal fields and a mini plant in Feruka, but the funding goes to salaries and operations support, but we were unable to mobilise funding for the next step of the project,” Ngorora said.

Nyaguse added: “Verify Engineering identified a South African partner, Magcor Investments, but later they sent a proxy, Nkosinathi Investments to represent them. Verify Engineering then undertook visits to identify potential companies in China to manufacture equipment for conversion of coal to fuels, but they demanded to see the feasibility study first.”

He said the Chinese said the feasibility study would cost US$50 million and government was unable to fund it, and yet it is a pivotal condition for the investment.

The two government officials said as a ministry, they had not met the investors who dealt with Verify Engineering. They said investors only put money in bankable projects, where feasibility studies are carried out to ensure that they recoup their money. Other conditions demanded by investors, the officials said, were guarantees from government that they would repatriate the money that they would have invested and in the event that the money made is in local currency, that they will be able to convert the money into US$ and repatriate it. They said these conditionalities were also affecting public-private-partnerships in the electricity sector.

Warren Park MP Shakespeare Hamauswa said it was disheartening that after the announcement by Mnangagwa that he had found investors for the project, nothing has happened yet.

Mutasa South MP Regai Tsunga blasted Finance secretary George Guvamatanga for ignoring the committee’s invitation to explain the stagnation of the project. Newsday

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