Energy Minister Fortune Chasi has directed the ZESA Holdings board to withdraw criminal charges against Wicknell Chivayo, whose company, Intratek, has failed to deliver on 100 MW solar power plant in Gwanda, Matabeleland South.
In a letter to ZESA chairman Sydney Gata on May 26, Chasi advised the power utility to abandon the fraud charges because the government “cannot afford the luxury of continued litigation” at the expense of expediting power generation.
Below is the full text of Chasi’s letter to Gata:
Dear Dr Gata
REVIEW OF THE FINANCIAL AND TECHNICAL, EXECUTION OF THE 100MW GWANDA SOLAR PROJECT.
I refer to a meeting jointly held by ZESA Holdings and Intratrek Zimbabwe (Pvt) Limited on Friday 22nd May 2020, in which I advised all parties in attendance of Government’s position with regards to the urgent need to implement the project.
I further draw your attention to a letter from your office delivered on even date of the meeting, whose contents I confirm to have duly noted.
In my communication of Government’s unequivocal position with regards to the Gwanda project, I sought to deliver the Ministry’s mandate to ensure the availability of sufficient power to the country by all means necessary.
It is now the prerogative of ZESA Holdings to ensure that the Government’s primary intention to address the energy demand is expediently and urgently given the attention it deserves.
In fulfilment of this mandate placed upon ZESA Holdings, there exists an obvious requirement that the necessary Board approvals be obtained in compliance with tenets of good corporate governance and all applicable statutes.
I wish to further reiterate that the Government’s position is fully informed by the following factors which have been approved at the highest level;
a) The Gwanda Solar project was and is still earmarked by Government as an economic enabler to the Transitional Stabilisation Programme (TSP) and successor policies adopted by government in 2018 and subsequently this year.
It forms part of the short to medium term solutions in resolving the energy deficit in the Country, thus spurring agriculture, mining and manufacturing activity which will increase the country’s export revenue.
b) Intratek assured Government that it can commence the project immediately as the funding is now available for this purpose.
Feeding 10MW into the national grid within the next 6 months will cause notable availability of power, thus significantly reducing the extent and cost of power imports, whose arrears in foreign currency are fully known by yourselves. This will inevitably contribute to assisting Fiscus inflows and support macro-economic growth.
c) Government has further taken full consideration of the proposed financial and technical soundness presented by the EPC Contractor through the Strategic Review Document submitted to my office and finds merit in the same.
It goes without saying that the bridge-financing model proposed by the EPC Contractor’s transactional advisors 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.
The same transaction advisors have also recently successfully commissioned a 5MW centagrid PV Solar Plant at Nyabira, which is now already augmenting power supplies from the country’s main power producers managed by ZESA Holdings. They have also reached financial closure for the remaining 20 MW which commissioning is
expected within the next 12 months.
d) It is common cause that African Transmission Corporation Holdings Limited, the prospective financier, has also been pivotal in assisting ZESA Holdings in the debt/equity structuring of the Hwange 7 & 8 US$1,4 Billion expansion project and were very instrumental in working with KPMG on the financial modelling for the Kariba 7 & 8 extension project, which was a resounding success.
Their competence being attestable, Government finds no reason not to find comfort in the same firm, led by Mr Victor Utedzi, whose impressive curriculum vitae I have had the occasion to peruse.
I am persuaded to believe that with such financial accolades, the quick syndication of a bankable financial model for the Gwanda solar project ought not to be problematic.
It is my Ministry’s logical opinion that at the revised price of US$139 Million, the debt/equity model will be less rigorous and thus ensure that financial closure would be reached expeditiously.
e) Government also took note of the involvement of high ranking professionals who now constitute the restructured EPC Contractor’s Board.
Of note, the Presidential Advisory Chairman – Mr Edwin Manikai – is leading the legal conscription of the proposed financial and technical variation of the project through Dube, Manikai & Hwacha Legal Practitioners.
It goes without mention that the firm ranks amongst the top 3 in the country and recognised as an exceptional commercial law firm by the Global Chambers International since 2014.
The key role of DMH and Mr Manikai in particular in the new arrangement speaks volumes on the integrity, professionalism and experience placed into the project, with Government concurring that all previous loop-holes would subsequently be forestalled and plugged.
Principally, the appointment of Mr Wilson Manase as the new Executive Chairman of Intratrek Zimbabwe (Pvt) Limited endows the project with high prospects of successful implementation.
Having chaired Metropolitan Bank for 16 years and being a Board member of a myriad of other successful and reputable private firms and government in Zimbabwe, Mr Manase is a practising lawyer and businessman of agreed prominence and as such, Government associates itself with the confident view that the project would be secured properly under his stewardship.
f) Government has also placed material consideration on the technical capacity of CHINT Electric Ltd, who have been contracted to execute the project.
CHINT’s financial and technical capacity has been duly assessed by ZPC and the due diligence report presented to me confirms the company to be fully knowledgeable in the field of both manufacturing PV modules and operating PV power stations.
The report further advises that is the second-largest solar power supplier in the world by a comprehensive performance rate awarded by PHOTON and a reputable blue-chip company listed on the Shanghai Stock Exchange with average annual sales revenue in excess of US$12 Billion, I find no objection to the company implementing the project.
Needless to state, however, Government will require that all the performance guarantees for the equipment installed be obtained and the interests of ZESA Holdings/ZPC as the end-user of the project be protected to the fullest extent possible.
In conclusion, I reiterate Government’s position, as similarly restated in High Court judgment HC 8159/18 by Chitapi JA in the two cases 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 and fighting in Boardrooms instead of implementing this project of national importance at the site..”. These points cannot be emphasized enough.
Indeed His Excellency, the President of Zimbabwe has launched “Vision 2030”, which demands Government implement policies and projects which will usher Zimbabwe into an upper-middle-class economy by 2030.
I urge you to support this vision, by all means, necessary, for the greater good of the Country. This project is inarguably a low-hanging fruit from which Government is poised to realise its success in no time.
It is against the changed circumstances, the foregoing background and context that I strongly recommend your Board to consider the urgent implementation of the following measures as directed by Government;
a) Expedite the negotiation, drafting and signing of an amended and restated EPC Contract in order to provide for and give full effect to the financial and technical proposal by the EPC Contractor;
b) Expedite the negotiation, drafting and signing of all subsequent agreements which will give effect to the project financing and technical implementation.
These include, but are not limited to the conclusion of the Power Purchase Agreement, tariff currency modalities, Implementation Agreement, Security of Payment Agreement amongst other Agreements which may be required by the financier and relevant regulators.
c) In making the foregoing sentiments I must draw the attention of the Board to the fact that the contract in casu was signed sometime in 2015.
Since that time nothing has been achieved except endless and pointless litigation with an appeal currently pending. It is not known when this appeal will be determined whilst on the other hand it is self-evident that the country is reeling under a serious power crisis that has already wreaked havoc to the economy and the generality of the populace.
d) Additionally, it is apposite to point out that this matter is of immense public interest given the power situation in the country and the history of the project.
It is the government’s intention to deal with both matters through the speedy implementation of the project
e) I make mention of the Board’s resolution on the future of the project. The resolution suggests that the consequences of the Court’s decision are irrelevant. This cannot be right. No advice or information is supplied as to the consequences of losing this appeal.
All in all, 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.
The High Court has made this point and expressed exasperation with the endless litigation. Government, given the current power situation, cannot afford the luxury of continued litigation anymore and has been forced to take a pragmatic approach to the production of power.
I understand that a meeting to discuss this matter is slated for tomorrow. Please kindly advise me as to the outcome of the meeting as soon as possible thereafter.
Please be guided accordingly.