CABINET on Tuesday approved the revised implementation plan
for the 100 megawatt (MW) Gwanda solar project that commits to deliver the
first 10MW within six months after signing of financial closure agreements and
fulfilment of all outstanding conditions precedent.
Energy and Power Development Minister Advocate Fortune
Chasi quickly pointed out that he will demand to see “the colour of the money”,
being proof of project funding, before any of the parties in the multi-million
dollar project puts pen to paper on the restated contract being drawn.
Minister Chasi confirmed in an interview, Cabinet’s
approval of the new implementation plan that is tied to a new contract,
involvement of renowned power project experts and a US$14 million “ready-made”
loan funding commitment for delivery of the first 10MW under the new phased
project plan.
The Energy Minister, while positive that the new pragmatic
implementation plan he wants implemented without further delays will bear the
desired results, stressed the requirement for the financier to prove funding
capacity first.
The project will be done in two phases, 10MW first and then
90MW by 2022.
The Gwanda solar project has courted controversy after the
contractor, Intratrek Zimbabwe, failed to deliver within agreed time-lines
citing failure by Zesa to fulfil certain of its obligations as well as funding
hurdles arising from Zimbabwe’s historical debts to China, the source of
funding.
“The parties are currently talking; they are negotiating to
ensure compliance with an earlier High Court order on a standing contractual
dispute. But yes, Cabinet gave approval for the project to go ahead after
consideration of the circumstances and facts on the ground,” Minister Chasi
said.
The project stalled following contractual dispute arising
from delays in implementation of preliminary works of the project after the
contracting part, State power utility Zesa Holdings had paid in advance for the
initial works, but did not fulfil all its obligations for the project to move
smoothly.
“The contract was signed in 2015, but to date little has
happened on the ground because of litigation, which is still ongoing yet the
country is in a precarious power situation.
“Also, the fact that disengaging the current contractor
will take an inordinate time will not be consistent with our current (dire
power) situation,” the Energy Minister said.
Minister Chasi is also on record saying he was in agreement
with High Court judge Justice Tawanda Chitapi’s ruling that the parties should
not waste precious time “merry dancing in boardrooms and courts” while the
whole country faced a crippling power crisis.
Justice Chitapi, while ruling on a contractual dispute
between Zesa and Intratrek over delays to the project, which Zesa lost, pointed
out that electricity was not generated in courts and board rooms, but at power
stations and urged the feuding parties to dialogue and stop being “dilatory” in
their approach.
Zimbabwe is facing a crippling power crisis that sees the
country endure up to 18 hours of outages and spends millions of US dollars to
ameliorate the impact of shortages. The country requires up to 2 200MW during
peak demand, especially winter, while it is able to generate below 800MW.
The drought has resulted in water levels at the country’s largest power plant, Kariba
South hydro-power station, dropping to critically low levels that prompted the
Zimbabwe River Authority (ZRA), which administers Kariba Dam, to cut water
rations for power generation purposes.
“We have taken a robust and pragmatic stance on the
project, it needs to move in earnest upon financial closure to make sure that
the first 10MW are delivered within six months of financial closure; that is in
2021 and the remainder by 2022. But I want to see the colour of money first;
not mere promises,” Minister Chasi told The Herald Finance & Business.
Notably, the contractor has since reportedly completed more
than 95 percent of the pre-commencement works for the Gwanda solar project,
which sparked the contractual dispute between Zesa and Intratrek and saw the
latter cancel the contract for the project. However, the High Court later ruled
the contract was still valid and enforceable.
The contractor, Intratrek Zimbabwe, has committed to
deliver 10MW within six months of signing of a power purchase agreement,
security of payment has been established, project funding secured and all
regulatory and Government undertakings being in place, envisaged by September
2020.
The conditions precedent, African Transmission Corporation
said should be signed as a single suite of documents and conditions that must
be in place and be met by September 2020 to allow construction to commence and
be completed within the targeted six months.
The new transaction advisor, ATC has been roped into the
project and has mobilised US$14 million for the first 10MW phase of the 100MW
Gwanda solar project.
ATC has a solid track record after it successfully
commissioned a 5MW centragrid photovoltaic solar plant in Nyabira, which is
already feeding the Zesa power grid.
Further, ATC mobilised US$6 million for its Nyabira solar
plant, which holds a licence for 25MW and has firm funding commitments for this
power initiative to complete the licensed capacity soon, once all outstanding
arrangements are secured.
Inclusion of ATC’s follows its successful record on similar
work for Zesa regarding the power utility’s US$550 million 300MW Kariba South
extension and the ongoing US$1,4 billion Hwange Power Station 7 and 8 expansion
programme.
Mr Victor Utedzi, founder of ATC, the new project
consultant for Gwanda, also carried out work in Mozambique, managing the
restructuring of the US$3 billion debt owed by power utility HCB to the
Government of Mozambique.
Additionally, he was at the centre of negotiations in
discussions for the 1 500MW cross-border power agreement between Mozambique and
South Africa, being only a fraction of several other multi-billion power deals
he brokered in Southern African where ATC has unmistakable footprint.
“The bridge funding for the 10MW is in place and would be
available for draw down in a short period of time. The construction period is
only six months; a very short period compared to other sources of power,” said
Mr Utedzi.
The engineering, design and technical execution of the
project will be steered by CHiNT Electric Co. Limited, a US$12 billion revenue
Shanghai Stock Exchange-listed blue-chip company founded by Chinese
billionaire, Nan Cunhui, a member of the central committee of the Chinese
Communist Party.
The contract for the Gwanda project was signed in 2012
after an award of the tender by then State Procurement Board, renamed
Procurement Regulatory Authority of Zimbabwe (PRAZ). The tender was awarded to
the lowest bidder to specification with a total of six firms submitting bids.
Along with winning bid for Intratrek, awarded by PRAZ on
the basis of compliance with all specifications, were two other tenders for
100MW projects won by ZTE Corporation and Number 17 Metallurgical China for
solar power plants in Bulawayo and Munyati, respectively, but have since been
cancelled over lack of progress. Herald
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