The Procurement Regulatory Authority of Zimbabwe (PRAZ), has directed State Power Utility, Zesa Holdings, to address sticking issues to the new proposed contract for the Gwanda solar project in line with the existing contract between the parties and previous procurement law forming the basis of the signed agreement.
This comes after Cabinet recently approved the new proposed implementation plan for the project, which committed to deliver the first 10 megawatts (MW) from Gwanda within six months, stressing that the project remains one of priority initiatives to end power shortages.
Zimbabwe faces a critical shortage of power with constrained internal generation capacity that averages 1 200MW against peak period demand of 2 000MW to 2 200MW. Drought, which reduced output at Kariba and Hwange’s advanced age, worsened the deficit.
According to a strategic review document for the Gwanda project presented to both Zesa and the Ministry of Energy and Power Development, a copy of which is in possession of Herald Finance and Business, the first 10MW will be funded through bridging finance from African Transmission Corporation (ATC) of US$14 million.
As such, the State procurement authority has directed Zesa to resolve issues at hand in line with the existing contract and relevant Procurement Law.
This comes after the power utility lost the High Court case against the contractor for Gwanda, Intratrek Zimbabwe, after terminating the contract for project over delays in implementation of some initial works and completion of financial closure.
The Zimbabwe Power Company (ZPC), Zesa generating arm, has since written to PRAZ seeking guidance over how best to proceed with the proposed new contract for the project, pointing out that the new contract has variations to the initial one.
“The new proposal has variations from the original specifications upon which the tender was awarded. In ZPC’s view the proposed variation will result in a contract materially different from the original one or would significantly alter nature and scope of contract,” ZPC said.
ZPC also said that after the High Court ruling that the contract between the parties was still valid and extant and directed the parties to the deal to find ways of implementing the power project, the State power utility had since reengaged the contractor.
“In light of the issues raised in the aforementioned letter, please note that your entity must be guided by the provisions of the contract between the parties to the agreement in addressing issues at hand.
“However, it is important to note that the applicable procurement law would be the repealed Procurement Act because that was the law that was in place at the time of contract signature.
“How to proceed with the contract is therefore a decision the accounting officer has to make although guided by the provisions of the Procurement Act and repealed regulations, together with terms of the contract that is still extant,” PRAZ said.
In a response letter to PRAZ, after seeing a copy of the letter ZPC wrote to the procurement regulatory authority, Intratrek said that it had not introduced any material variations to the contract signed in 2015, and that its proposal was only of phasing the project.
“The intention therefore is that of implementing the project in two phases of 10 megawatts then 90 megawatts, but complying with the criteria and technical specifications of ZPC to the full extent.
“We place on record that Intratrek’s proposal is neither materially different from the original contract, nor does it have an effect of increasing the contract price in the manner greater than the permitted under section 80,” Intratrek said in the letter to PRAZ.
The contract price for the Gwanda solar project has been reduced from US$172 million to US$139 million in accordance with the global price reductions in the cost of solar photovoltaic modules. – Herald