A US$150 million solar power plant deal is facing collapse after prolonged bureaucratic delays frustrated the investor, who top government officials say is now considering pulling out and suing for losses, it has emerged.
Top government officials told the Zimbabwe Independent this
week that the deal was under threat due to dithering by the Zimbabwe Energy
Regulatory Authority (Zera) to grant a licence to the investor, Boustead Solar
(Boustead).
This has put under sharp scrutiny President Emmerson
Mnangagwa’s “Zimbabwe Is Open for Business” mantra.
The multi-million-dollar project, on the verge of suffering
a stillbirth, is meant to generate 180 megawatts (MW) of power. This comes at a
time Zimbabwe is battling a fresh power crisis with prolonged load-shedding.
It also comes as the globe is moving to renewable sources
of energy, of which solar is central, and shedding off polluting fossil energy
sources and hydropower plants which are now unsustainable due to climate
change-induced warmer conditions.
Although Zimbabwe entered a “new dispensation” following
the military coup that ousted long-time ruler Robert Mugabe in 2017, the
country is still struggling to unlock fresh investment capital.
With Mugabe’s exit, after a near-four-decade rule marked by
stagnating Foreign Direct Investment (FDI) and a deteriorating economic
environment, Mnangagwa commenced his tenure pledging to roll out business
friendly policies.
His government also promised to improve Zimbabwe’s standing
on the Ease of Doing Business Index.
Setting up a reliable energy infrastructure, coupled with
uprooting hurdles associated with registering new businesses into the sector,
have been identified as essential building blocks towards reviving the economy.
In the latest investment project, Zera has taken more than
18 months to process a licence for Boustead Solar, after the entity submitted
its application last year in January.
Subsequently, sources told the Independent this week the
investor is now on the verge of withdrawing the application while contemplating
instituting legal action to recover US$200 000 paid in application fees.
Zera has issued 120 licences for various projects which are
yet to be implemented. The 120 licensed projects are generating in total less
than 30MW.
“It is ridiculous that Boustead Solar has not been issued a
licence by Zera for a US$150 million investment as they are still considering
its application despite issuing 120 licences, which are yet to yield 30 MW in
Zimbabwe. Each time the investor makes inquiries, he is told the application is
still being processed,” an official source said this week.
“Boustead Solar has instructed its lawyers to withdraw
their application and demand a refund of US$200 000 paid in application costs,”
the source said.
Under terms of the project, set to be rolled out in phases,
an initial 32MW was to be installed in Bulawayo at a cost of over US$830 000
per MW.
Boustead Solar representatives could not be reached for
comment at the time of going to print.
Zera chief executive Eddington Mazambani told the Zimbabwe
Independent this week that Boustead’s application was under consideration.
“The application is going through an assessment and a due
diligence process. An update pertaining to this project was duly communicated
to the project owners,” Mazambani said.
He said if all required conditions are satisfied, a licence
is normally issued within six months.
Mazambani said: “According to the Electricity Act (Chap
13:19), a power generation licence may be issued within six months subject to
the applicant having submitted all the licencing requirements.
“However, Zera pledges, through its Stakeholder Service
Charter, to issue the power generation licence within 90 days if all the
relevant documents are submitted on time. In respect of the application, the
project promoter was responded to accordingly.”
A cursory look at Zimbabwe’s investment climate in 2017
when Mnangagwa took over shows that the country has struggled to attract FDI,
amid calls by multilateral lenders and the West for government to roll out
sweeping economic reforms seen as key towards setting the country’s battered
economy on a firm recovery and growth trajectory.
As part of efforts
to lure investment, the government has also established the Zimbabwe Investment
and Development Authority (Zida), whose other core function involves addressing
bottlenecks impeding investment.
Mnangagwa has also been studying the Rwandan economic
model, which has earned global acclaim, in a bid to attract foreign investors.
Rwanda is one of the continent’s fastest growing economies whose friendly
investor policies have been applauded globally.
FDI in 2017 stood at US$250 million, sharply rising to
US$740 million in 2018 before plunging to US$280 million in 2019.
Boustead Solar is a subsidiary of Boustead Beef, the
company which entered an agreement with the government to inject US$600 million
towards reviving defunct Cold Storage Company (CSC) in 2018.
With the world moving towards embracing environmentally
friendly energy sources, implementing the solar project would be integral for
the beef processing concern to penetrate lucrative markets which are particular
about carbon emissions.
“Our problem is to sell the beef in lucrative markets. We
have to be sustainable and carbon neutral. Controlling carbon emissions is all
part of the process of raising investment which we have to go through,” an
industry expert said.
“We have been worried about this issue for the past 22
weeks when Boustead paid Zera. Zesa has already done the grid impact
assessment. The same applies for processing the Environmental Impact Assessment
(EIA). Now Zera is delaying everything,” the source added.
Sources said Zera was now asking for a water extraction
permit and soil samples from Boustead, requirements which do not apply to
setting up a solar power plant.
This is not the first time huge investment deal has been
scuppered by bureaucratic red tape. In
2015 Aliko Dangote, Africa’s wealthiest man, was dissuaded from investing in
Zimbabwe after a former minister solicited for a US$5 million bribe.
Dangote was on a visit to scout for business opportunities
in Zimbabwe in 2015 during which trip he expressed commitment to set up a cement
manufacturing plant in the country.
Rampant corruption, policy inconsistencies and bureaucratic
red tape, among other factors have been identified as scuttling capital in
Zimbabwe.
Though the government introduced the Victoria Falls Stock
Exchange (VFX) which exclusively trades in foreign currency, investors have
shied away from the bourse. Only two counters namely Seed Co and Portland
Cement are trading on the bourse.
Market watchers have opined that implementing far reaching
economic and political reforms would inject life into Zimbabwe’s economy.
The much-hyped US$400 million National Railways of Zimbabwe
(NRZ) revival deal by the Diaspora Infrastructure Development Group (DIDG) was
terminated after a lengthy and convoluted process. The consortium has since
instructed lawyers to slap NRZ with a US$215 million lawsuit following
termination of the deal to recoup costs and related losses.
DIDG, mostly constituted by Zimbabwean entrepreneurs, are
now setting up a US$350 million titanium dioxide plant in neighbouring South
Africa through their Nyanza Light Metals investment vehicle. Once complete, the
plant will be the first of its kind in Africa.In 2015, the government also
terminated the US$750 million Ziscosteel revival deal by Indian conglom
erate Essar Holdings. Five years on, the government is yet
to identify a suitable investment partner to inject fresh investment capital
into the moribund state enterprise. Zimbabwe Independent
0 comments:
Post a Comment