THE Zimbabwe Electricity Supply Authority (Zesa) has buckled under internal pressure, forcing it to reduce the amount of power it will buy from the controversial Dema Diesel Power Plant by 50% amid internal protests.
Top government and Zesa officials revealed this week the power utility revised the deal on Monday after considering the costs of cancelling the project given that generators are already in the country.
The meeting resolved that instead of paying US$16,1 million per month as the tender documents show, the Zimbabwe Electricity Transmission and Distribution Company (ZETDC) will pay US$8,25 million per month.
As a result, the Dema deal now costs US$83 million. Initially, according to tender documents, the deal was meant to cost a staggering US$194 million a year, if Zesa bought 1,072 gigawatt hour (GWh) at a cost of 18,06 US cents per kilowatt hour (18,06c/kWh). ZETDC will now purchase electricity from the Dema Power Plant at 15,45c/kWh.
Sources said despite the reduction of the amount of power that will be purchased from Dema, Zesa consumers will still bear the brunt as they will continue to pay 18,06c/ kWh.
President Robert Mugabe’s in-law Derrick Chikore is partnering Kuda Tagwirei of Sakunda Holdings in the murky project, which is set to trigger an increase in electricity tariffs. Chikore is brother to Simba who is married to the president’s daughter Bona.
Sakunda was awarded the project despite not tendering. APR Energy Holdings won the tender for the project last year, but the company was later sidelined in favour of Sakunda after intervention by the Office of the President and Cabinet.
The deal — which carries serious financial, technical and operational risks — is largely seen as a brazen crony arrangement at the expense of Zesa and its clients.
“After the public outcry a meeting was held on Monday where it was agreed to cut by 50% the amount of power to be bought from Dema so that ZETDC and Zimbabwe Power Company (ZPC) are not financially crippled,” the official said.
“Considerations were made to completely drop the deal or not but the stumbling block was that generators are already in the country.”
The sources also said Energy minister Samuel Undenge then took the revised position to cabinet, which endorsed the deal on Tuesday.
“Undenge met with the Zesa management on Monday and then he briefed cabinet on the revised deal on Tuesday,” the source said.
“ZETDC will buy power from Sakunda at 15,45c/kWh and this will be sold to the consumers at 18,06c/kWh.”
Last week, this paper reported that the Zimbabwe Energy Regulatory Authority (Zera) was ordered by the OPC to approve a tariff of 15,45c/kWh for the power purchases agreement.
Zera then wrote to Sakunda on May 20 advising the company’s tariff structure had been approved.
“Zera advises that a tariff of 15,45c/kWh for the power purchase agreement between ZETDC and Sakunda for 100MW (tender document says 200MW) diesel-fired power plant was approved by the Zera board at its meeting of May 3 2016,” reads the letter.
“The approval is subject to the concurrence by the minister in terms of Section 53(6) of the Electricity Act (Chapter 13:19). Once consultations are concluded, Sakunda will be informed.”
Documents seen by the Independent show Sakunda was awarded the 200MW project despite not participating in the tender process.