Zesa corruption scandal deepens

ZIMBABWE Electricity Supply Authority (Zesa) inexplicably awarded a US$113 million Munyati Power tender to convicted fraudster Wicknell Chivayo and his Indian partners Jaguar Overseas Limited (JOL) last year despite the latter’s failure to raise funds for the cheaper Harare II Repowering Project it had been awarded in 2014, new documents seen by the Zimbabwe Independent show.

By Herbert Moyo

Zesa headquarters along Samora Machel Avenue in Harare.
Zesa headquarters along Samora Machel Avenue in Harare.

Chivayo, who is involved in several other dodgy Zesa deals — was awarded a tender to refurbish Munyati Power Station despite that neither his company Intratek nor JOL, had the capacity, experience or resources to undertake the project.

Additional documents seen by the Independent this week show Chivayo was awarded the Munyati tender even though Zesa’s subsidiary Zimbabwe Power Company (ZPC) knew fully well that JOL had already failed to access US$52 million for the much cheaper Harare II Repowering Project that the company had been contracted to undertake on August 4 2014. This worsens the Zesa corruption scandal.

On winning the Harare Project tender which was valued at US$70,18 million, JOL made an unsuccessful application for funding to the Exim Bank of India. The company has been unable to implement the project to date thus raising questions as to why Zesa awarded Intratek and JOL the more costly Munyati (US$113 million) project.

JOL confirmed their inability to access funding for the Harare Project through emails sent by Chief Financial Officer Ramesh Gupta to ZPC executives Noah Gwariro (managing director) and Hubert Chiwara (Finance Director).

“We have been informed by Exim Bank of India that after due diligence of the present proposal due to various factors currently they will not be in a position to fund this proposal,” Gupta wrote in an email titled financial closure of contract no. ZPC154/2014 dated 4th August 2014 for the rehabilitation and modernisation of thermal power plant Harare II, Zimbabwe.

“We would like to further inform you that we are continuously in touch with Exim Bank, exploring various other alternatives and other measures for successful closure of the Harare Project,” Gupta wrote in another email four days later on October 5 2015.

However, in November 2015, more than a year after being awarded the Harare Power Station deal, Intratek and JOL were awarded the more costly Munyati project.

A due diligence report done by ZPC after the companies were awarded the project highlighted that it would be risky to engage JOL.

“Based on the findings of the due diligence and experience with JOL on Harare II Repowering Project it was noted that it will be highly risky to engage JOL as the EPC contractor for the Munyati Repowering Project and the committee recommends that it would not be prudent to enter into another contract with JOL who have not yet delivered on the Harare II Repowering Project,” reads the report. “The Harare II Repowering Project which has not commenced to date was signed on the 4th August 2014 and is valued at US$70, 18 million of which JOL’s contribution is US$ 52 million.”

Intratrek, which has no previous experience or proven record in power projects, was awarded the Munyati contract on November 12 2015 to rehabilitate and modernise the 61-year-old thermal energy power plant to bring its generated capacity to 100 megawatts at a cost of US$113 182 627.

This is in addition to the US$200 million 100-megawatt solar power plant in Gwanda, Matabeleland South province, in which Chivayo was paid US$5 million without a required bank guarantee.

Just like Intratrek, Chivayo’s Indian partner JOL has no experience in power projects as it is “still new to power plants”, according to ZPC’s due diligence report.

The due diligence done by ZPC also highlighted that JOL has done some shoddy work or was blacklisted in several countries, including Zambia, Democratic Republic of Congo (DRC), Swaziland, Ethiopia and India, where it is facing litigation.