HARARE – Zimbabwean multi-millionaire tycoon Kudakwashe Tagwirei has for the first time explained how he got a controversial tender to set up the disastrous Dema Power Plant project in 2015.
The project cost started at US$194 million over three years before being reduced to US$83 million and later escalated to US$250 million.
The massive tender scandal was exposed by the Zimbabwe Independent newspaper at the time, then run by The NewsHawks editors.
The author of the award-winning story is now a senior Zimpapers editorial executive.
The project was meant to provide an emergency power reprieve as the country faced electricity cuts over a US$734 million debt to electricity suppliers.
Initially, the tender was won by American company, APR Energy Holdings, but the firm was later sidelined in favour of Tagwirei’s Sakunda Holdings which had not participated in the bidding process after an by intervention of the Office of the President and Cabinet.
Government officials claimed, without any proof, that APR was a “security threat” to justify their corrupt decision.
So Sakunda got the tender through a cabinet directive, not the open bidding process.
The tender was however shot down by state power utility Zesa executives and engineers who argued it was costly, unsustainable and risky, but it was imposed on them and the country, including the public, all the same.
The deal — which carried serious financial, technical and operational risks for Zesa — was largely seen as a brazen patronage and cronyism arrangement at the expense of Zesa and its clients.
Tenderpreneurs do not get government contracts to provide a public service first and foremost and make money in the process, but primarily for self-enrichment without even caring about service delivery.
To prove it was about cronyism, Sakunda initially partnered the late former president Robert Mugabe’s in-law Derrick Chikore (brother to Bona’s ex-husband Simba Chikore) who brought precious little, in fact nothing to the table except his relations with the Mugabe family.
Initially pegged at US$194 million a year, it was then reduced to US$83 million a year, following the Independent’s exposé of how the project would cause a huge spike in electricity tariffs, while crippling the Zimbabwe Power Company and Zimbabwe Electricity Transmission and Distribution Company.
The Dema project consumed 12 million litres of diesel per month to produce 100MW.
APR later revealed Zesa could have saved a staggering US$200 million over three years had it explored alternatives such as the use of liquid petroleum gas instead of diesel-powered generators at Dema.
APR chairperson and chief executive John Campion then told the Independent at the time that diesel-powered reciprocating engines were “not the most practical or cost-effective option available to ZPC or its customers.”
“Had the options for power generation truly been open-ended, we would have recommended a solution using state-of-the-art mobile gas turbines that could run on conventional fuels such as diesel, as well as lower-cost and widely available alternatives such as liquid petroleum gas, naphtha and kerosene. The turbines’ ability to switch seamlessly between fuels allows power generators to adjust fuel supply based on cost and availability,” Campion said.
After getting the tender in 2015 without a clue on what to do, Sakunda subcontracted Aggreko, one of the losing bidders, as a technical partner in the project.
The plant was subsequently built in 2016.
It had an installed capacity to produce 200 megawatts from 228 diesel generators.
However, this was reduced to produce 100 megawatts with 111 generators; 25 000 to 27 000 litres of diesel were needed to produce the 100MW.
Tariffs on diesel imports were removed for the project.
Zesa was expected to buy electricity from the plant at above market cost, which was going to worsen its financial position and exort money from the public.
This led to the plant largely being mothballed mid-2018.
After that, Sakunda was not done. It tried to sell the failed project to Zesa for US$66 million.
Zesa rejected a proposal by Sakunda to buy the failed power plant for US$66 million, as it later emerged in a parliamentary inquiry.
At the time Zesa executive chairman Sydney Gata said: “We declined to purchase the power station for US$66 million. I had opportunity to visit the power plant, and to inspect the engineering layout, the designs and facilities at the power station. I’m very surprised that this country could actually license an asset like that. I saw something that, as an engineer, is a capital offence.
A site visit revealed how 5000 litres of diesel were being stored in an exposed open plastic-enveloped reservoir.
“It was a potential calamity for the communities around there. I did not see fire-fighting equipment, I did not see emergency equipment. I didn’t see environmental mitigation measures.”
Meanwhile, Tagwirei denied he was corrupt, saying the people who complain about corruption are usually the most corrupt.
He said if his Dema project was corrupt, then it was “corrupt” in the right direction as he offered a lower cost than APR, the initial tender winners.
In the process, he also said that former Finance minister Tendai Biti is corrupt and ex-Local Government Saviour Kasukuwere very corrupt.
Biti and Kasukuwere were not available for comments at the time of writing, but The NewsHawks will get their comments later in the day.
