eBusiness Weekly
Golden Sibanda
Harare businessman Wicknell Chivayo has written to President Mnangagwa explaining circumstances that have caused delay in the implementation of a 300 megawatt State power utility solar farm project, awarded to his company Intratrek Zimbabwe, which has courted controversy over little progress since the tender was awarded in 2015.
There has been unending outrage from various quarters over the lack of progress in the Gwanda solar project following earlier revelations about $5,1 million of State resources were used to pay contractors without a bank guarantee while no progress had been registered.
However, Chivayo says his company has now completed 80 percent of pre-commencement works following the recent submission of a geo-tech survey report on the project, which was carried out at a cost of $686 000, reportedly clearing the outstanding balance of ZPC’s exposure from the $5,1 million.
The Harare-based businessman says he has cleared over 80 hectares of the project site, submitted a feasibility study (at a cost of $2,1 million) secured approvals for environmental impact assessments and is close to finishing fencing the site..
Chivayo says he has made this progress against the odds, and his proposals to overcome funding challenges he says stem from Zimbabwe’s arrears on earlier loans advanced by China, and he was also not receiving communication cooperation from ZPC to speed up the project.
In the long letter to President Mnangagwa, the Intratrek Zimbabwe founder and managing director, who holds 50 percent shares of the company, accused the Zimbabwe Power Company (ZPC), the generation arm of State power utility Zesa Holdings, as partly responsible for causing delay in implementation of the project.
Chivayo, who has been attacked by public officials over his handling of the multi-million dollar project, also cited Zimbabwe’s sovereign debt as a major impediment.
“It is fundamental to note Your Excellency that during the bidding for the solar project, Intratrek had submitted China Eximbank as its financier, since the bank had agreed to fully fund the project in 2015,” he said.
“When Intratrek signed the EPC contract and approached the bank together with ZPC to discuss terms of the project funding, the bank however indicated that its ability to fund the project was subject to the Zimbabwean Government clearing its premium arrears with Sonosure, who are the guarantors and underwriters of all funding that originates from China,” Chivayo said.
China Eximbank had agreed to fund the project, awarded to Intratrek and its Chinese technical partner CHiNT Electric, at an engineering procurement and construction (EPC) cost of $172 million. The contractors have proposed to cut the EPC cost to about $140 million given the falling cost of installing solar power plants across the world.
However, Chivayo said efforts to waive the impact of delays caused by the sovereign debt to China, for which the Asian Country’s state insurer resolved to block further loans to the country until it settled outstanding premium arrears, by pursuing alternative measures to keep the project moving, ZPC had thrown spanner in the works.
“The ZPC has been intransigent and has assumed powers that rival those of the ministry. The board has been sailing in a direction that is inadvertently opposite to the ease of doing business. Intratrek has frequently engaged ZPC with a view to resolve the Sinosure matter.
In an attempt to lure a possible waiver of the requirement to pay the Sinosure premium arrears, Intratrek proposed a funding alternative to ZPC through the raising local infrastructure bonds to insurance firms and pension funds to raise required funds for the project.
“CBZ expressed willingness to float the bonds to insurance firms and pension funds to raise the required funds for the project. This proposal was even recommended by the Ministry of Finance and Economic Planning on 5 April, 2017.
“Notwithstanding Intratrek’s proposal and the minister’s strong recommendation to implement the same, the ZPC non-executive board of directors contemptuously refused, neglected and or rejected to implement the proposed option for reasons unknown to us,” Chivayo said.
Chiyayo also said Intratek’s technical partner, $32 billion asset company CHiNT Electric, had recommended to ZPC an alternative local fundraising arrangement, including implementing the project in modular phases of 25MWx4 to maximize on time that has been lost thus far.
“It is therefore clear that ZPC’s complacency has caused delays in implementation of the project. ZPC is not obliged to secure funding for the project, but should render all practical assistance to the contractor to ensure that financial close is reached.
Chivayo also pointed out that ZPC has to date not responded to proposal by its Chinese technical partner, which had pledged to provide a $52 million advance payment guarantee, representing 30 percent of total project cost, to cover any potential risk of performance.
“Had the funding been readily available through ZPC, Intratrek/CHiNT would only require 6-8 months to implement the contract and feed clean (solar) energy to the grid,” Chivayo wrote.
“By comparison, only Intratrek/CHiNT Electric has made notable progress on site compared to ZTE Corporation and Number 17 Metallurgical China who are other Chinese contractors, but have done nothing in respect of their 100MW (each) solar projects,”Chivayo added.
Chiyayo said it was common cause that projects of a technical nature and substantial value such as the 100MW Gwanda solar project took time to reach financial closure, as typified in Kariba South, which took at least three years and Hwange, which took about four years.
