Government has thrown its weight behind the Gwanda solar project, saying the country needs adequate power and the 100 megawatt (MW) initiative was among its key interventions to end energy shortages.
Energy and Power Development Minister Advocate Fortune Chasi has since directed Zesa Holdings to urgently resolve, out-of-court, its protracted dispute with Intratrek Zimbabwe to allow the project to proceed.
He said the withdrawal of all litigation and an amicable resolution of the dispute to allow the current contractor to proceed with the project for the good of the country, had already received backing at “the highest level” of Government.
Minister Chasi directed management at ZESA to ensure it received the necessary board approvals for the resolution of the dispute with Intratrek to be settled outside the court.
A meeting involving high-ranking Zesa and ZPC officials, their chief executive and managing director, respectively, was held on May 22, 2020, to thrash out new terms for an amended engineering, procuring and construction (EPC) contract to replace the existing project agreement.
In his letter to ZESA executive chairman Dr Sydney Gata for the feuding parties to find a lasting solution to the legal battles, Minister Chasi said the Government was unhappy with the wrangles that had not produced results.
As the sole shareholder in ZESA and ZPC, Minister Chasi said the Government had the mandate to deliver adequate power to satisfy the competing needs of industry, including key economic anchor projects in mining.
Notably, the minister said pre-commencement works that lagged behind and the main cause of the contractual dispute, had since been completed and the basis for endless litigation had since been overtaken by events.
Minister Chasi said given the prevailing power situation, the Government was interested in the Gwanda solar project and expected ZESA not only to take note of the Government’s concerns, but to act on the issues at hand as a matter of urgency.
“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 up until last week the parties 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 power shortages, and importing very expensive power,” he said.
Minister Chasi’s directive comes as ZESA, through its generation arm, Zimbabwe Power Company (ZPC), has since 2017 been involved in an abrasive contractual dispute with the contractor after terminating the agreement over alleged missed timelines.
Denying responsibility for factors that delayed the Gwanda project, prompting the power utility to terminate the contract, Intratrek approached the courts of law contesting the cancellation and twice Zesa Holdings and ZPC have been on the losing end.
As such, Minister Chasi said ZESA needed to quickly settle the dispute with Intratrek outside the courts.
He said Zesa and its generation unit, ZPC, were already in contempt of High Court judgments passed by Justice Chitapi and that he agreed with the High Court judge’s reasoning that electricity was not generated in the courts.
Minister Chasi said in giving the directives for ZESA to engage Intratrek, he had considered a number of key factors, which have altered the previous landscape in relation to the issue.
These included the fact that the Gwanda solar project 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 solutions to end the power deficit.
Intratrek, Minister Chasi said, has assured the Government, working with reputable partners that have delivered on similar power initiatives and similarly working on other mega progressing state initiated power projects.
Funding is also reportedly now available for delivery of the first 10MW of solar energy within six months to benefit over 30 000 residents of Gwanda, in phased development of the project.
He 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,” Minister Chasi said.
The prospective financier, African Transmission Holdings (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 no reason not to find 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 power grid.
He noted the involvement of eminent professionals in the restructure EPC contractor’s board, notably Presidential Advisory Council (PAC) chairman and renowned Harare lawyer, Mr Edwin Manikai.
Mr Manikai is now leading the legal conscription of the financial and technical variation of the amended project contract through Dube, Manikai and Hwacha Legal Practitioners.
Prominent Harare lawyer and successful businessman Mr Wilson Manase, has been appointed the new executive chairman of the Intratrek Zimbabwe, enhancing prospects of project success.
Minister Chasi said Government had placed material consideration on the capacity of CHiNT Electric; the Chinese firm that has been contracted to execute the project and whose financial and technical capacity has been assessed by ZPC.
CHiNT, which has successfully implemented projects in Zimbabwe, 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 price of US$139 million the debt/equity model will be less rigorous and financial closure will be reached expeditiously,” Minister Chasi said.
He 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 there was a need for an 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 and fighting in boardrooms instead of implementing this project of national importance at the site.”
Minister Chasi said the President had launched vision 2030, which demands Government to implement policies and projects which will usher Zimbabwe into an upper middle class economy by 2030.
“I wish to reiterate that Government’s position is fully informed by all these factors which have been approved at the highest level.
“I consider the foregoing as having placed Government’s position in unambiguous clarity. Megawatts will ultimately be made at the project and not in courts of law,” the Minister said.
He said the High Court had made this point clear the Government, given the current power situation, cannot afford the luxury of continued litigation anymore and has been forced to take a pragmatic solution to the production of power.
Before the project was thrown off rails by the contractual dispute, Intratrek had won the tender for the project ahead of six other contenders as the least cost bidder to specification.
Intratrek MD Wicknell Chivayo, declined to comment referring all enquiries to Minister Chasi. – Herald