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ENERGY and Power Development Minister Fortune Chasi says Government cannot afford the luxury of endless legal wrangles relating to the Gwanda solar project in the face of a new financing plan that he believes can help reduce chronic power deficits.
It is against this background that Advocate Chasi has directed State power utility, ZESA Holdings, to pursue an out of court settlement with the contractor, Intratrek Zimbabwe, which would allow the 100 megawatt (MW) project to proceed for the delivery of the much needed electricity.
To this end, new project implementation modalities have been proposed, which will see the existing contract being amended to include provisions that require the contractor to deliver the first 10 megawatts from Gwanda project within six months from beginning of August this year.
Supreme Court ruled to the contrary
However, in a development likely to derail Advocate Chasi’s roadmap, the Supreme Court said the trial of Intratrek managing director Wicknell Chivayo on a criminal fraud charge of US$5,6 million fraud involving ZPC’s Gwanda solar project, will now proceed after this week the apex court reversed his acquittal by the High Court.
The National Prosecuting Authority had appealed the High Court decision absolving Chivayo and his company of any criminal liability in the botched multimillion dollar deal with the power company. Chivayo was facing three counts of fraud when High Court Judge Justice Owen Tagu, cleared him of all the charges in July 2018 ruling that it was a civil matter rather than a criminal case.
The Prosecutor-General took the matter up to the Supreme Court on appeal and a three-judge panel comprising Deputy Chief Justice Elizabeth Gwaunza, Justice Rita Makarau and Justice Susan Mavangira who this week unanimously allowed the appeal.
In the judgment, Justice Makarau said the High Court erred in interfering with the unterminated criminal proceedings before the trial magistrate Lazini Ncube and ruled that the fraud trial could now proceed.
But Advocate Chasi thinks his roadmap is good for the country
However, Advocate Chasi said the new funding modalities include a new financing model by consultants – African Transmission Corporation (ATC) – which recently delivered a solar power plant in Mashonaland West Province and inclusion in the solar project of some of Zimbabwe’s top legal minds in the realms of business and contract execution.
This comes amid revelations that the pre-commencement works, for which the contractor received US$5,6 million but could not finish in the time, sparking the contractual dispute, had since been overtaken by events because they had been completed.
Notably though, the parties apportioned blame for factors that caused delays to the solar project and yet strikingly, three years since the fallout, there has neither been a winner in the courts nor for the country which desperately needs power from the project.
As such, the minister said since the pre-commencement works for the Gwanda project had been completed, the basis for the endless litigation had now been overtaken by events.
Minister Chasi said the 100 megawatts solar power initiative still ranked top among the list of priority and strategic interventions long planned by Government to end the prevailing chronic energy crisis.
Advocate Chasi has since directed the State power utility Zesa Holdings, through correspondence that was also copied to President Mnangagwa, to urgently resolve outside the courts of law the dispute with the contractor, Intratrek Zimbabwe, to allow the project to proceed.
Withdrawal of litigation
Advocate Chasi said the withdrawal of all litigation and an amicable resolution of the dispute would allow the contractor to proceed with the stalled solar power project for the good of the country and security of power supply in Zimbabwe.
The proposal, the minister said, had already received support at “the highest level” of Government. He said it was also instructive to note that two other 100MW solar tenders, awarded at the same time as Gwanda, to Chinese firms Number 17 Metallurgical China and ZTE Corporation had not even taken off the ground.
Such a scenario, also speaks volumes about complexity of engineering, procurement and construction (EPC) contracts, which take long before funding is secured and actual project development begins.
This also partly explains the reason why ZESA has failed to achieve any traction on the Harare and Munyati power stations repowering projects, to restore about 100MW of power generating capacity at each of these old small thermal plants.
“Should we completely ignore the fact that experts like Victor Utedzi (of ATC), who recently delivered 5MW through a photovotaic centre grid in Nyabira, have promised that within six months they will deliver the first 10MW.
“Should we instead start a new process that will take no less than 18 months before work begins, making it effectively seven years?” Minister Chasi said, suggesting rather, that resolving the dispute offered more viable option.
All stakeholders meeting convened
As such, a meeting of all the senior management of ZESA and Zimbabwe Power Company (ZPC), ZESA’s generation arm, which included the entities’ chief executive and managing director, respectively, was held on May 22, 2020.
The meeting was organised to discuss and thrash out fresh terms for the amended EPC contract to replace the existing one; which is now the subject of dispute.
In his letter to ZESA executive chairman Dr Sydney Gata directing the feuding parties to meet and discuss lasting solution to the bickering and legal fights Advocate Chasi said Government was not happy with the ongoing wrangles that have failed to produce any tangible results thus far.
The energy minister also implored Zesa to be mindful of the complicated, long and arduous process of starting on fresh tendering processes even if the legal fights ended.
He pointed out that, for instance, the tenders that gave birth to the Gwanda solar project were first flighted in 2012 but were only awarded in 2015.
As the sole shareholder in both ZESA and ZPC, Advocate Chasi said Government had a mandate to deliver adequate power to satisfy the competing needs of industry and rest of society.
Zimbabwe requires between 1 800MW and 2 200MW at peak periods but has been generating below 800MW.
Advocate Chasi said given the power situation, Government was still very much interested in the Gwanda solar project and he expected ZESA not only to take note of its concerns, but to act on the issues at hand as a matter of urgency.
Power not generated in courts – Advocate Chasi
“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 until last week the part 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 the power shortage, and importing very expensive power” the energy minister said.
Minister Chasi’s directive comes as ZESA, through its generation unit, ZPC, has since 2017 been involved in an abrasive contractual dispute with the contractor after terminating the contract for Gwanda solar project over missed timelines.
Denying any responsibility for factors that delayed the project, which prompted the power utility to terminate the contract, Intratrek then approached the courts of law contesting the cancellation and twice Zesa Holdings has been on the losing end.
Advocate Chasi said in an interview that ZESA needed to quickly settle the dispute with Intratrek outside the courts of law for the benefit of the whole country and progress in resolving the current dire power supply situation in Zimbabwe.
The energy Minister said Zesa and its generation unit, ZPC, were already in contempt of High Court judgments passed by Justice Tawanda Chitapi and that he agreed with the judge’s reasoning that electricity was not generated in the courts of law but at the power stations.
Minister Chasi said, in giving the directive for Zesa to engage Intratrek for the speed resolution of the dispute outside the courts of law, he had considered a number of key factors, which have altered the previous landscape in relation to the issue.
These included the fact that Gwanda solar 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 term solutions to end the power deficit in the country.
Key turnaround strategists roped in
Intratrek, Advocate Chasi said, has assured the Government, working with reputable partners that have delivered on similar power initiatives in the country and also working on other mega progressing domestic electricity projects.
Funding is also reportedly now available for delivery of the first 10MW of solar energy within six months that will benefit over 30 000 residents of Gwanda, under phased development of the project, which will help Zimbabwe reduce imports and benefit the rest of the country.
He also 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,” he said.
The prospective financier, African Transmission Corporation (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 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 grid managed by Zesa Holdings.
The energy minister said he had also noted the involvement of eminent professionals in the restructure of EPC contractor’s board, notably Presidential Advisory Council (PAC) chairman and renowned Harare lawyer, Edwin Manikai.
Manikai is now leading the legal constription of the financial and technical variation of the amended project contract for Gwanda through Dube, Manikai and Hwacha Legal Practitioners.
Harare lawyer and successful businessman Mr Wilson Manase, has also been appointed the new executive chairman of the Intratrek Zimbabwe.
Further, Advocate Chasi said Government had placed material consideration on the capacity of CHiNT Electric; a blue-chip Chinese electrical engineering firm that has been contracted to execute the project and whose financial and technical capacity has been assessed by ZPC.
CHiNT 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 (EPC) price of US$139 million (from US$173 million initially) the debt/equity model will be less rigorous and financial closure will be reached expeditiously,” he said.
The revised lower EPC contract price is in tandem with declining cost of building solar power plants, as technologies continue to evolve with cheaper ones coming through.
Advocate Chasi 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 that there be 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 of law and fighting in boardrooms instead of implementing this project of national importance at the site.”
Online Reporter