Sunday, 28 June 2020

CHIVAYO'S GWANDA PROJECT TO DELIVER 10MW IN SIX MONTHS


AFTER stuttering in the initial phase, the 100-megawatt (MW) Gwanda solar project is expected to resume later this year under a new phased implementation schedule that could deliver the first 10MW within six months.

According to the revised implementation plan seen by The Sunday Mail Business, the first phase involves drafting an amended engineering, procurement and construction (EPC) contract between the Zimbabwe Power Company (ZPC) and the contractor, Intratrek, which is almost complete.

The parties will also seek a generation licence and environmental management permit within a month, complete a power purchase agreement (PPA) and conduct environmental impact assessment (EIA) within two months, as well as fulfil renegotiated conditions precedent in two-and-a-half months. 

Further, they must have the funding proposal approved by financiers in three months and get the first drawdown and EPC notice to proceed in four months.

After this elaborate process, it should take six months to deliver the first 10MW from Gwanda.

Energy and Power Development Minister Fortune Chasi recently said the new implementation plan has full support from Government.

ZESA — the State-owned parent company of power generating utility Zimbabwe Power Company (ZPC) — has since appointed economist and former Government advisor Professor Ashok Chakravati to chair a special implementation committee for the project. 

“Given the current capacity depletion at ZPC, I have appointed a Special Board Committee chaired by Professor Chakravati to assist, expedite and oversee execution of the project,” chairperson Dr Sydney Gata wrote in a correspondence to Government updating progress on the project.

Minister Chasi has been exhorting ZESA and contractor Intratrek Zimbabwe to stop wasting time in the courts over a contractual dispute and find an amicable solution that can deliver power.

The dispute, which has spilled in the courts, was sparked by delays in implementing the project’s pre-commencement works. The parties have been brawling in the courts since 2017.

Demand for power in Zimbabwe, which stands between 1 800MW and 2000MW at peak periods, especially during the winter season, far outstrips internal generation capacity of about 600MW to 800MW. 

Local production capacity is seriously constrained by aged plant and equipment at the country’s largest coal power plant, Hwange Power Station (rated 920MW), and drought that reduced dam water levels at Kariba, whose hydro power plant is capable of producing 1 080MW.

ZPC cancelled the contract with Intratrek citing its failure to complete preliminary works in time, but Intratrek argued that it failed to deliver due to forces beyond its control.

The company claims that it delivered a feasibility study report in time at a cost of US$2,1 million.

Other key preliminary works included geotechnical survey (US$686 336), topographical study (US$25 000), site clearance of 200 hectares (US$2 389 682), fencing (US$549 336), quarry and sand (US$190 000), signage (US$30 000), which reportedly could not be completed in time because ZESA did not have an environmental certificate.

It is believed that the certificate was only secured in 2018 after advance payment funding had been released to the contractor.

Preliminary works have since been completed at a total cost of US$6,6 million, which is over and above the US$4,9 million that ZESA paid through its generation arm, ZPC.

It is also claimed that there were further delays after Sinosure – the State-owned Chinese guarantor of most outbound Chinese investments – refused to cover the risk from the investment over previous unpaid loans to Zimbabwean entities.

This was despite the fact that China Eximbank had agreed to fund the solar project.

But now, under the new implementation modalities, funding is being arranged from a consortium of international banks in Mauritius and Dubai.

The funding arrangements are being spearheaded by power projects consultant Victor Utedzi’s African Transmission Corporation Holdings (ATC) through provision of US$14 million loan to finance the first 10MW phase.

ATC recently completed a 5MW solar plant in Nyabira, which is already feeding the national grid.

The EPC contractor, Intratrek, will be responsible for only 5 percent of the project, whose cost has been reviewed from US$173 million to US$140 million in line with the falling cost of solar projects across the globe. 

The balance of 95 percent of project works will be executed by the EPC contractor’s technical partner, CHiNT Electric Co. Limited, which is listed on China’s Shanghai Stock Exchange.

In Zimbabwe, CHiNT has undertaken several projects already after undertaking the installation of 16 substations for ZETDC, including 132kV subtastations at Sherwood in Kwekwe, two in Redcliff,  (including Zisco), and Zvishavane.

CHiNT, which has installed more than 5000MW of solar globally and has successfully undertaken several projects for Zimbabwe Electricity Transmission and Distribution Company (ZETDC) in Zimbabwe, was founded in 1984 by billionaire Nan Cunhu.

Minister Chasi has been pushing ZESA and Intratrek to respect a High Court order by Justice Tawanda Chitapi, which encouraged the two parties to settle the matter.

Inordinate delays, he said, work against Government’s plan to resolve the country’s power challenges. Sunday Mail

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