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ZESA defends multi-million dollar solar corruption in Chivhayo’s Gwanda – ZimEye

ZESA defends Chivhayo’s multi-million dollar Gwanda solar corruption

By Business Reporter-The Zimbabwe Power Company (ZPC) says the government’s failure to pay reinsurance to Sinosure, an export credit agency of China Exim Bank that was to finance Zimbabwe’s 100 megawatt solar power plant Gwanda, prevented the project from taking off.

ZPC signed a contract with Intratrek Zimbabwe Pvt Ltd on October 23, 2015 to supplement the country’s energy needs with renewable solar energy. However, almost nine years have passed without any movement on the Gwanda project.

ZPC also claims that the tender awarded to Intratrek was legitimate because the then State Procurement Board informed the company that Intratrek was one of the lowest bidders that met the specifications required by ZPC.

However, work on the solar project was delayed and compounded by a protracted legal fight between ZPC and Intratrek, in which Intratrek accused ZPC of unfairly terminating the contract, resulting in the Supreme Court ruling that the contract of ZPC was still valid and executable.

During a meeting with the Parliamentary Portfolio Committee on Energy on Wednesday at the solar plant site in Gwanda, ZPC management stated that they could not afford to cancel the contract due to the way it was packaged and that the shortage financing exacerbated the problems.

Tungamirai Chinhengo, legal advisor and corporate secretary of ZESA Holdings, explained that ZPC and Intratrek signed an Engineering, Procurement and Construction (EPC) contract in which the contractor identifies a potential financier, who then submits a term sheet to ZPC, whose terms are evaluated.

“If it were acceptable, the ZPC, according to the Public Finance Management Law, would request a loan certificate from the Ministry of Finance. Only on that basis can ZPC borrow funds in its name and capacity, funds which will be used to pay the EPC contractor,” Chinhengo said.

“In terms of any collateral security or performance bond, the current EPC contract requires an advance payment security, a performance security and, thirdly, a retention in respect of the works that would have been carried out. So, contractually, the agreement is very strong in that it protects the interests of ZPC as well as those of the Zimbabwe government.”

Legal counsel said the nature of ZPC and Intratrek’s contract included suspensive terms where payment of the deposit became a prerequisite for the agreement to come into force.

To begin work on the site, certain requirements were required, which according to Chinhengo were perhaps six or eight or suspensive conditions that had to be met.

“Now the contract states that these conditions had to be met within 24 months from the date of signing, which meant that by April 23, 2017 these suspensive conditions should have been met,” he said.

“But the contract also allowed for a six-month extension of this period if the parties had not complied with the suspensive conditions as effectively, the contract gave 30 months within which the suspensive conditions must now be complied with. “

Chinhengo said some of these conditions were met but “the biggest elephant in the room has always been the issue of funding”.

“During the period of 2015, when the contract was signed, there were several changes within the monetary policies and so on,” he said, adding that the Zimbabwe government was obliged to make certain payments to Sinosure, a credit reinsurance company. export of China Exim Bank. .

“At the time the tender was awarded to Intratrek, the funding base was supposed to come from China Exim Bank. So 24 months went by while the financing couldn’t come from China Exim Bank because there was a view that there were certain payments that weren’t made to Sinosure, so basically that was the contractor’s excuse to then say, “In my opinion, I’m worried, I have given them a financier who is willing and ready to finance, but the financier says they have not yet paid my reinsurance to the export credit agency Sinosure,’” he explained.

“After the 30 months had passed, that became the basis for ZPC to terminate the contract because the argument was to say that you are the EPC contractor who is obligated, under the terms of the contract, to obtain financing. So that was the legal basis we considered for terminating.”

Chinhengo stated that the nature of government-to-government financing, also known as cross-border financing instruments, is such that all projects developed by the government are covered by a specific facility.

“The amount that the government should pay to the export credit reinsurer simply considers all the projects that the government will develop based on financing from China Exim Bank. So it was not directly related to this project but to other projects that the government was developing at that time,” he explained.

Chinhengo clarified that ZPC was not the first to go to the High Court but had just canceled the contract on April 23, 2018.

“It was Intratrek who approached the High Court in 2019, claiming that we had unlawfully terminated the contract. That is what led to the start of the protracted legal battle as we know it,” he said, noting that most of the nine years after the tender was awarded had been spent in court.

“The first time this matter was referred to the High Court was actually in January 2018, but the contract had been signed on October 23, 2015. So there were only three years of trying to implement it, after which the ZPC terminated it alleging that at the time the contractor was considered to have failed to comply.”

“The majority, during which there was no activity on the site, was actually during the pendency of the litigation initially in the High Court, then in the Supreme Court, then again in the High Court and finally in the Supreme Court last December . year.

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