FRESH questions are lingering over how 25 million litres of fuel reportedly imported duty-free for the Dema Emergency Power Plant were used amid revelations that only half of that was utilised to generate 100 megawatts, the Zimbabwe Independent has established.
By Elias Mambo/Benard Mpofu
This comes as it emerges that the Office of the President and Cabinet (OPC) is trying to block an investigation of Sakunda Energy over its role in the controversial plant.
The Independent has reported extensively on the Dema Emergency Power Plant which has an inflated cost structure. The cost of the Dema project escalated alarmingly from US$249 million to US$498 million over three years, after the government directed the controversial project’s managers to double its output to 200 megawatts at US$166 million per year at a time the country is failing to pay for power imports.
A parliamentary portfolio committee on mines and energy has visited the Dema project, among other generation plants such as Hwange and Kariba to assess the situation.
Questions arising out of the Dema deal include how Sakunda got the contract without going to tender; how United States power giant APR Energy Holdings was sidelined after winning the tender; who is behind the project; how they are being paid and how much they have so far received; how much fuel has been imported duty-free and how it has been used; what are the electricity tariffs involved; cost of the project; how much power has been generated and all the processes involved, among other issues like the cost-benefit analysis, its overall utility to the nation and whether it is the best alternative available.
This comes amid growing concerns President Robert Mugabe’s office could have corruptly helped Sakunda to secure the deal which has raised a stink.
APR initially won the tender, but was sidelined in favour of Sakunda.
As first revealed by the Independent, Sakunda, owned by Zanu PF benefactor Kuda Tagwirei, partnered Mugabe’s in-law Derrick Chikore, brother to Simba, who is married to the president’s daughter Bona, in the dodgy and costly deal without going to tender. The Zimbabwe Power Company (ZPC), which commissioned the project, 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 at the 200MW Dema Emergency Power Plant.
The contract, likely to run for three years, was initially set at US$194 million a year, but has been reduced to US$83 million following pressure from the media and Zimbabwe Electricity Supply Authority (Zesa) officials.
The Dema project sparked outrage as it became increasingly clear that electricity consumers and taxpayers would be further burdened with the project’s unsustainable and unjustifiable costs.
The deal, being supervised directly by the OPC, was initially meant to cost US$194 million a year, before it was reduced to US$83 million a year but has now shot up to US$166 million a year.
To ensure the smooth flow of the corrupt project, the government put a waiver on the import duty for fuel used at the plant so that costs remain at US15,45 cents per kilowatt hour (c/kWh) instead of US18c/kWh the company initially applied for.
The tariff, however, remains high when compared to imports from the Southern African Power Pool, as well as electricity produced at other power stations locally. Electricity generated at Kariba costs US4,11c/kWh, while that from Hwange Thermal Station costs US6,97c/kWh.
ZPC engineers have argued that it would have been cheaper to expand capacity at existing power stations rather than setting up the costly Dema Power Plant.
Zimbabwe imports electricity from the Zambia Electricity Supply Corporation at a cost of US5,18c/kWh, Mozambique’s Hidroeléctrica de Cahora Bassa (HCB) at US5,66 c/kWh, South Africa’s Eskom at 13,32c/kWh) and Lunsemfwa of Zambia 8,00c/kWh.