The High Court has ordered Zimbabwe Power Company (ZPC) and Intratrek Zimbabwe to engage and map the way forward regarding completion of the Gwanda solar power project, after granting the latter leave to execute the court’s earlier judgment declaring the contract between the parties valid.
Intratrek had applied for leave to execute High Court
judge, Justice Tawanda Chitapi’s December 2018 ruling, pending appeal, over a
contractual dispute regarding the Gwanda solar project, which was delivered in
favour of Intratrek.
However, ZPC is contesting the judgment at the Supreme
Court.
ZPC had purportedly cancelled the contract for the 100
megawatts solar project citing breach of contract, alleging Intratrek had not
performed as agreed despite receiving payment without availing a bank guarantee
as agreed.
In the latest appeal, Intratrek prayed for an order of
specific performance saying the State power utility had frustrated the contract
after causing the arrest of its director, Wicknell Chivayo, on trumped up
criminal charges.
While ZPC denied causing the arrest of Chivayo, Justice
Chitapi said records of allegations in the criminal case showed ZPC’s managing
director was the complainant and as such, “an appeal court by an imagination
cannot find otherwise”.
It also averred that it had faced challenges securing
project finance from China due to legacy debts of the Zimbabwe
Government, which was the project guarantor, hence on its
part had fictionally fulfilled its obligations.
Justice Chitapi said that he found no prospects of success
by ZPC in its appeal against his judgment at the Supreme Court and no
likelihood of irreparable harm to the power utility if leave to execute pending
appeal was granted.
“In the result, I dispose of the application as follows;
leave to execute the judgment of this court HH 818/18 is granted and the said
judgment shall be given full effect notwithstanding the appeal noted by the
respondent to the Supreme Court under case number SC2/19 on January 7, 2019,”
he said.
Justice Chitapi said it was clear that the balance of
convenience was in favour of granting leave to execute pending appeal as “what
is to be executed is the contract by engagement of the parties”. Further,
Justice Chitapi said that the project was of strategic importance.
“It has already been observed that the subject matter of
the contract is of national importance. It is of public interest. The public
wants electricity for use at home and in industries. The public is not
interested in bickering for self-interest and egos on the part of State actors and
their contractors,” he said.
“The project was granted national project status. The
electricity envisaged to be produced upon successful completion of the project
is not for the consumption of applicant and respondent, but benefits the whole
nation since the power will be fed into the national grid,” the judge said.
Justice Chitapi said that while ZPC claimed that it had
paid Intratrek US$5 million for pre-commencement works and for which the
contractor did not deliver requisite value (which the contractor refuted), he
did not rule on the issue, but simply referred the parties dispute back to them
to resolve in terms of the dispute resolution mechanism in the contract.
He said there was no potential risk of prejudice to be
suffered by ZPC from the granting of the leave to execute the earlier judgment
pending appeal as the order simply stated that the contract between the parties
was still extant and using provisions for dialogue and dispute resolution in
the contract that the parties should engage and relate over the issue.
The High Court judge noted that if any prejudice was to be
suffered, it was the cost of delays to the nation and national development,
given the delicate balance between demand and supply of power in the country at
the moment.
The High Court Judge said ZPC wanted to frustrate
performance of the contract on realising that China Eximbank, as initially
envisaged, would not provide project finance due to Government of Zimbabwe
legacy debts, and it would have to carry the burden of project funding itself.
“Whether by judgment or wrong advice, (ZPC) has let the cat
out of the bag. It is trying to clutch at straws to avoid potential liability
payment,” Justice Chitapi said in his judgment.
The Government was the guarantor of the US$172 million
Gwanda solar project, which was supposed to be funded by China Export and
Import Bank (China Eximbank).
“The motive for appeal is improper. It is disgraceful that
national projects are stalled by contracting parties having merry dances in
board rooms instead of project sites and seeing the project to fruition,”
Justice Chitapi noted.
Further, Justice Chitapi said he had to consider the
potential irreparable damage to the contractor if he refused to grant leave
pending appeal, as there continued to be potential injury to the contractor’s
business interests.
While ZPC claimed that the contractor had failed to perform
or deliver value, Justice Chitapi said he agreed with Intratrek’s argument that
its failure to deliver on some milestones set in the contractor was a result of
the conduct of ZPC.
On claims by ZPC that the High Court erred in its findings
on construction of contractual obligations, Justice Chitapi said ZPC
acknowledged in full liability to pay sub-contractors in full as well as the
position that an advance payment guarantee was still to be availed.
“It is indisputable fact that at all times in the
evolvement of the parties’ relationship in terms of the contract between them;
the issue of advance payment remained topical.
“Payments were made in full knowledge that the issue of the
advance payment guarantee was being pursued. In the premises, there was no
fraud committed, as there was no misrepresentation made by either party nor
alleged to have been committed.”
He said the issue of advance payment was never hidden at
all times, as evidenced by the then State Procurement Board (SPB) agreeing to
downward variation of the contract price to ensure financial close.
Further, he said Government also directed CBZ to raise
funding locally because it was not able to clear its Chinese loan arrears,
where the guarantee was supposed to come from. Herald
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