Government has thrown its weight behind the Gwanda solar
project, saying the country needs adequate power and the 100 megawatt (MW)
initiative was among its key interventions to end energy shortages.
Energy and Power Development Minister Advocate Fortune
Chasi has since directed Zesa Holdings to urgently resolve, out-of-court, its protracted dispute with Intratrek
Zimbabwe to allow the project to proceed.
He said the withdrawal of all litigation and an amicable
resolution of the dispute to allow the current contractor to proceed with the
project for the good of the country, had already received backing at “the
highest level” of Government.
Minister Chasi directed management at ZESA to ensure it
received the necessary board approvals for the resolution of the dispute with
Intratrek to be settled outside the court.
A meeting involving high-ranking Zesa and ZPC officials,
their chief executive and managing director, respectively, was held on May 22,
2020, to thrash out new terms for an amended engineering, procuring and
construction (EPC) contract to replace the existing project agreement.
In his letter to ZESA executive chairman Dr Sydney Gata for
the feuding parties to find a lasting solution to the legal battles, Minister
Chasi said the Government was unhappy with the wrangles that had not produced
results.
As the sole shareholder in ZESA and ZPC, Minister Chasi
said the Government had the mandate to deliver adequate power to satisfy the
competing needs of industry, including key economic anchor projects in mining.
Notably, the minister said pre-commencement works that
lagged behind and the main cause of the contractual dispute, had since been
completed and the basis for endless litigation had since been overtaken by
events.
Minister Chasi said given the prevailing power situation,
the Government was interested in the Gwanda solar project and expected ZESA not
only to take note of the Government’s concerns, but to act on the issues at
hand as a matter of urgency.
“Power is generated at power stations, not in the courts of
law, ZPC and Intratrek have been in the courts since time immemorial, my
principal concern and mandate is to generate power for the people of Zimbabwe.
“Since my appointment last year, I have given the parties
the latitude to resolve the matter, and the courts, Justice Chitapi in
particular, ordered the parties to meet and discuss implementation of the
project, but up until last week the parties had not met.
“Seeing that the parties were dilatory in their approach to
this matter I felt that it would be extremely irresponsible on my part as Minister
of energy to continue to have the matter held in abeyance in the same vein
Government is grappling with power shortages, and importing very expensive
power,” he said.
Minister Chasi’s directive comes as ZESA, through its
generation arm, Zimbabwe Power Company (ZPC), has since 2017 been involved in
an abrasive contractual dispute with the contractor after terminating the
agreement over alleged missed timelines.
Denying responsibility for factors that delayed the Gwanda
project, prompting the power utility to terminate the contract, Intratrek
approached the courts of law contesting the cancellation and twice Zesa
Holdings and ZPC have been on the losing end.
As such, Minister Chasi said ZESA needed to quickly settle
the dispute with Intratrek outside the courts.
He said Zesa and its generation unit, ZPC, were already in
contempt of High Court judgments passed by Justice Chitapi and that he agreed
with the High Court judge’s reasoning that electricity was not generated in the
courts.
Minister Chasi said in giving the directives for ZESA to
engage Intratrek, he had considered a number of key factors, which have altered
the previous landscape in relation to the issue.
These included the fact that the Gwanda solar project was
and is still earmarked by Government as a key enabler to the Transitional
Stabilisation Programme (TSP) and successor policies; forming part of the short
to medium solutions to end the power deficit.
Intratrek, Minister Chasi said, has assured the Government,
working with reputable partners that have delivered on similar power
initiatives and similarly working on other mega progressing state initiated
power projects.
Funding is also reportedly now available for delivery of
the first 10MW of solar energy within six months to benefit over 30 000 residents
of Gwanda, in phased development of the project.
He said Government had noted and found merit in the
technical and financial soundness of the proposed strategic review plan for
project implementation submitted by the contractor, Intratrek Zimbabwe.
“It goes without doubt that the bridging financing model
submitted by the EPC contractor’s transactional is led by a team of renowned
experts in the field of project financing and legal advisory with respect to
the implementation of EPC contracts in the region,” Minister Chasi said.
The prospective financier, African Transmission Holdings
(ATC), has been playing a pivotal role in the debt/equity structuring for the
ongoing US$1,4 billion 600MW Hwange 7 and 8 expansion project, which is now
over 30 percent complete.
“Their competence being attestable, Government finds no
reason not to find comfort in the same firm, led by Victor Utedzi, whose
impressive curriculum vitae I have had the occasion to peruse,” the Minister
said.
ATC recently successfully commissioned a 5MW photovotaic
centre grid at Nyabira, which is now feeding the national power grid.
He noted the involvement of eminent professionals in the
restructure EPC contractor’s board, notably Presidential Advisory Council (PAC)
chairman and renowned Harare lawyer, Mr Edwin Manikai.
Mr Manikai is now leading the legal conscription of the
financial and technical variation of the amended project contract through Dube,
Manikai and Hwacha Legal Practitioners.
Prominent Harare lawyer and successful businessman Mr
Wilson Manase, has been appointed the new executive chairman of the Intratrek
Zimbabwe, enhancing prospects of project success.
Minister Chasi said Government had placed material
consideration on the capacity of CHiNT Electric; the Chinese firm that has been
contracted to execute the project and whose financial and technical capacity
has been assessed by ZPC.
CHiNT, which has successfully implemented projects in
Zimbabwe, is the largest solar company in the world by a comprehensive
performance rate awarded by PHOTON, while the firm is listed on the Shanghai
Stock Exchange with an asset base of US$12 billion.
“I am persuaded to believe with such financial decoration,
the quick syndication of a bankable financial model for Gwanda ought not to be
problematic.
“At the revised price of US$139 million the debt/equity
model will be less rigorous and financial closure will be reached expeditiously,”
Minister Chasi said.
He reiterated the contents of “well-reasoned judgements by
Justice Chitapi in two matters”, which ZPC lost where he said “with the current
Government’s thrust there was a need for an accelerated development to ensure
the attainment of a middle income status for the country by 2030.
“It is hoped that key projects like the one involved in
this case are not stalled by unnecessary bickering and extra contractual
frustrations” and “ parties should desist from merry-dancing in the courts and
fighting in boardrooms instead of implementing this project of national
importance at the site.”
Minister Chasi said the President had launched vision 2030,
which demands Government to implement policies and projects which will usher
Zimbabwe into an upper middle class economy by 2030.
“I wish to reiterate that Government’s position is fully
informed by all these factors which have been approved at the highest level.
“I consider the foregoing as having placed Government’s
position in unambiguous clarity. Megawatts will ultimately be made at the
project and not in courts of law,” the Minister said.
He said the High Court had made this point clear the
Government, given the current power situation, cannot afford the luxury of
continued litigation anymore and has been forced to take a pragmatic solution
to the production of power.
Before the project was thrown off rails by the contractual
dispute, Intratrek had won the tender for the project ahead of six other
contenders as the least cost bidder to specification.
Intratrek MD Wicknell Chivayo, declined to comment
referring all enquiries to Minister Chasi. Herald
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