DESPITE clear evidence of irregularities and corruption in their deal, Sakunda Holdings and partners, including British supplier of temporary power generation equipment Aggreko, are steaming ahead with the controversial US$83-million-a-year 200 megawatt Dema Diesel Power Project. The project will result in a spike in electricity tariffs while financially crippling the already struggling Zimbabwe Power Company (ZPC).
The project, which was initially pegged at US$194-million-a-year, was awarded to Sakunda, owned by Zanu PF benefactor Kuda Tagwirei who partnered President Robert Mugabe’s in-law, Derrick Chikore, without the company going to tender. Derrick is brother to Simba who is married to the president’s daughter Bona.
The tender was initially won by American power company APR Energy Holdings before it was corruptly taken away and awarded to Sakunda for the benefit of individuals who are politically well-connected and their handlers in high offices and top circles.
This comes as information gathered this week shows that at a recent cabinet meeting Local Government minister Saviour Kasukuwere fiercely protested against the Dema project, much to Mugabe and other ministers’ shock, saying it was an expensive venture and a burden to the ordinary people who are already suffering due to the continued economic decline and high utility charges.
Further investigations by the Zimbabwe Independent this week showed that Aggreko, the company which supplied the diesel generators for the project, has dispatched a team of managers and technicians to Zimbabwe to kick-start the project.
The team of close to 50 people arrived in mid-April. The group, which includes managers and engineers from Dubai, where Aggreko’s international projects business operates from South Africa and other African countries, is booked at Crown Plaza, Oasis and Cresta Oasis hotels in Harare.
The team consists of project managers, operations managers, engineers, commissioning staff and other specialists.
Sources close to the development said the team has been in the country for this long without making much progress because Sakunda had problems with the Zimbabwe Revenue Authority (Zimra), which refused to clear certain equipment urgently and allow operations to commence before relevant taxes were paid.
“Sakunda had problems with Zimra and the generators could not be cleared for more than a month,” said the source adding; “There were also problems to do with the supply of fuel.”
“About 50 000 litres of diesel was supplied last weekend and work has now started in earnest. There is also a team of experts from a South African company to perform high voltage or high potential tests — a dielectric withstand test — to assess the condition or adequacy of electrical insulation or insulation resistance.”
The project is now going on, but at a huge cost and the tariffs burden will be passed on to consumers who will pay more in terms of tariffs.
The Dema undertaking also comes at a time when the ZPC is about to be disconnected by Eskom of South Africa, which has been exporting 300MW since December last year.
Zesa sources said consumers will be forced to pay increased tariffs to accommodate Aggreko, Sakunda and other silent partners in the controversial deal.
The project, which is under the direct supervision of the Office of the President and Cabinet, is the latest in a string of scandals rocking state power utility company, Zesa Holdings.
Documents show ZPC will pay US$8 million in advance every month for the Dema project, which could run for three years, further escalating the cost. Comapnies and thus the economy will also suffer if power charges go up.
The documents seen by the Independent proved that Sakunda was corruptly awarded the 200 megawatt project despite not participating in the tender process.
The Zimbabwe Energy Regulatory Authority has already approved a new tariff of 15,45 US cents/kWh for the power purchases agreement.
By comparison, electricity generated at Kariba costs 4,11c/kWh, while that from Hwange Thermal Station costs 6,97c/kWh, making expansion projects far cheaper. The Dema deal, documents show, will have serious cash-flow implications on ZPC, hence its recent application to increase the tariff by 49%. This means Zesa’s struggling customers, already battling with huge bills and poor service delivery, are now being asked to subsidise corrupt activities.
Zera has, however, rejected the application.
APR, which initially won the tender but was side-lined in favour of Sakunda, told the Independent recently that the diesel-powered reciprocating engines were “not the most practical or cost-effective option available to ZPC or its customers.”
APR said that Zesa could have saved approximately US$200 million over three years had it explored other alternatives such as the use of liquid petroleum gas instead of diesel powered generators.