News:$5 Million ZESA payment to Chivayo was out of order, Minister Undenge

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Undenge Samuel.jpg

The Minister of Energy and Power Development, Dr Samuel Undenge issued a personal statement yesterday saying that after engaging the Zimbabwe Power Company management and its board, he found that the company had erred in paying Wicknell Chivayo $5 million for the Gwanda Solar Project as the bank guarantee was an “inevitable” aspect in the contract.

He however insisted that despite erring, the payout would not result in the loss of public funds. Undenge was explaining the unsecured advance $5 million by the energy infrastructure subsidiary of power utility Zesa Holdings, to Intratrek, a company fronted in Zimbabwe by Wicknell Chivayo. Said the minister:

It is true that each time public funds are advanced to service providers, there is a risk that the goods or service, as the case may be, may not be delivered. To mitigate against this risk, it is as a standard requirement that a bank guarantee is secured against possible failure to deliver. Such an inevitable requirement should have been considered in the case of a $5m advance payment to Intratrek by the ZPC.

In this regard and noting the many energy projects that we are embarking upon, it was necessary for me to engage both management and the ZPC board chairman on the issue. Common ground has been established on same and, going forward, the relevant procedures and requirements shall be adhered to. The contract agreement between the Zimbabwe Power Company and the contractors stipulates that there shall be payment for the pre-works. The work involves preparation of feasibility study, environmental impact assessment, topographical and geophysical surveys, site civil works as well as fencing of the site and to that effect $5 million has been paid. Already subcontractors are on site.

Given the above, it is highly improbable or unlikely that there will be any real prejudice to the ZPC in respect of this particular advance. Thus, in this ministry’s assessment, whereas the risk was there, in reality, there will be no financial prejudice and this in no way exonerates those who erred.

It must also be appreciated that Intratek's foreign and technical partner is a well established Chinese international company that had already successfully undertaken many Zimfund power projects, which were managed by the African Development Bank (AFDB). The contract provides for the payment of all servcies rendered by the technical partner being paid direct to the technical partner.

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