HomeAnalysisCorruption derails Zim power projects

Corruption derails Zim power projects

DESPITE the Zimbabwe government awarding power generation contracts amounting to more than US$1 billion to dodgy companies that have inflated their bills by more than US$500 million and pocketed millions in upfront payments, the country’s electricity supply situation remains inadequate and unreliable, pointing to the huge cost of corruption on energy availability.

Taurai Mangudhla

Government has in recent years awarded tenders amounting to hundreds of millions for power generation projects to a number of companies without following procedure, prejudicing the taxpayer on contracts that are yet to bear fruit, as deep-rooted corruption takes a toll on the country’s power generation efforts.

As Zimbabwe’s power deficit remains huge, with capacity to produce about half of its 2200MW peak demand, state utility company, Zesa, has depended on imports to offset the huge deficit. In previous years, the country experienced severe load-shedding due to low generation statistics, but the situation has improved, with load-shedding now on minimal, due to de-industrialisation.

Energy secretary Patterson Mbiriri was on record last year as saying the 2200MW peak demand was for 1999, prior to the chaotic land reform of 2000 that destroyed agriculture and sparked massive economic decline. As of 2016, peak demand had come down significantly to 1400MW, leaving a supply gap of about 300MW given that generation hits 1100MW on good days. On June 6, the country generated 1 050MW across its stations, 530MW from Kariba and 520MW from Hwange.

A manufacturing industry survey done by the Confederation of Zimbabwe Industries in 2016 revealed that despite an increase in capacity utilisation from 34,3% to 47,4% in the year, Zimbabwean industry remained subdued by corruption, policy instability, lack of access to cheap finance, competition from imports and low demand for domestic products.

Although demand for electricity has waned in line with economic decline, the country imports as much as 350MW per day from Eskom, costing the economy millions when key generation projects, save for the Kariba expansion, are yet to take off. Zesa imports 300MW per day from South Africa and currently owes Eskom US$44,5 million, of which US$8,9 million is outstanding arrears.

Zesa is on record as saying work on the Kariba expansion is almost complete with 150MW expected to be added to the national grid by the end of 2017, while another 150MW expected to be added by the end of March 2018.

The Kariba expansion project is an exception in a basket of opaque tenders that were awarded to contractors of questionable credentials.

The corruption-ridden Zesa is entangled in a number of tender scandals, including one in which convicted fraudster Wicknell Chivayo was awarded a US$113 million deal on top of several other projects by the company’s subsidiary, Zimbabwe Power Company (ZPC), despite lacking capacity and resources to implement the project.

Chivayo was in 2015 awarded a tender to refurbish Munyati Power Station despite that neither his company nor his Indian partners, Jaguar Overseas Limited (JOL), had the capacity and resources to undertake the power development scheme.

Chivayo’s company Intratrek, which has neither the experience nor a 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 100MW 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.

The Zimbabwe Independent has reported extensively on the Dema Emergency Power Plant in which government was prejudiced through inflated cost structures. The cost of the Dema project escalated alarmingly from US$249 million to US$498 million over three years, after government directed the controversial project’s managers to double its output to 200MW at US$166 million per year, as Zimbabwe fails to pay for power imports.

Sakunda Fuel owner Kuda Tagwirei partnered President Robert Mugabe’s son-in-law Derrick Chikore for the project without going to tender. The deal, which is being supervised directly by the Office of the President and Cabinet, 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.

Zesa deals were as of 2016 inflated by more than US$500 million, raising suspicions Zesa executives and senior government officials, including ministers, are benefitting from the shady contracts, which the authorities are reluctant to investigate.

Recently, another scandal was exposed when it emerged local information communication technology company Aura Group was sidelined in a bid for Zesa prepaid electricity tokens in favour of the utility’s subsidiaries that had been disqualified in the tender process.

All these corruption scandals have cost the nation and hampered efforts to improve Zimbabwe’s infrastructure.

Economist Vince Musewe said tenders are used to oil Zanu PF’s machinery and enrich individuals at the expense of national good.

“When tenders are used to oil patronage and the looting machine, delivery is the last consideration and secret deals around tenders will remain the norm for as long as this government is not accountable and transparent,” said Musewe.

“The issue of power generation is critical for our economic revival and yet there is no seriousness in addressing this issue at all. Zanu PF has failed completely to revive this economy and this is only one of many examples of the inability to implement and manage critical infrastructure.”

Zimbabwe Centre for Natural Resource Governance director Farai Magawu said energy is critical to the Zimbabwean economy hence the need to invest in power generation including renewable energy.

“Zimbabwe needs to invest more in renewable energy, particularly solar. Zimbabwe is a highly sunny country, receiving at least 2 000kWh/(m²year). However, the country has remained fixed on non-renewable dirty energy such as coal, which is universally blamed for high carbon emissions that increase global warming. Solar energy ensures electricity reaches remote parts of the country faster, thereby contributing to rapid rural economic development,” said Magawu.

“However, the main challenge to the attainment of the above is the rentier economy which rewards laziness and corruption. Agriculture and solar energy requires real investments and careful planning, which are impossible if implemented under predatory elite,” Magawu added.

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