Obscure South African company Nkosikhona Holdings, which recently signed a staggering US$5,2 billion deal with government to turn coal into liquid fuel, cashed in on the Lisulu coal deposits in Hwange, Matabeleland North, after roping in Canadian consortium Magcor to implement the project modelled along Sasol Limited lines.
By Tinashe Kairiza/Owen Gagare
The South African company, which was registered in 2013 and has a questionable track record, signed the deal with the government through Verify Engineering Private Limited — an agent of the Higher Education Ministry — last month.
President Emmerson Mnangagwa, Higher Education minister Amon Murwira (pictured), Chief Secretary to the President and Cabinet Misheck Sibanda, Energy and Power Development minister Simon Khaya Moyo and several government officials witnessed the signing ceremony.
The deal involves coal production and the setting up of a beneficiation plant for the production of liquid fuels, fertilisers and chemicals. The plant will be established in Lisulu, along the Zambezi basin, where coal is available in abundance.
Government says the energy and chemical deal will result in the country producing over eight million litres of liquid fuel per day.
Magcor — an engineering and international development consortium of companies registered in Canada with a presence in the United States, Philippines, China and Africa — has, however, effectively seized control of the project in a capital-for-equity deal with Nkosikhona.
The deal resulted in the creation of a new entity, Vectol Zimbabwe, which will implement the project. Magcor is the major shareholder in Vectol, while Nkosikhona and Verify will not have significant roles.
A search at the Company Registry shows Vectol, which is still in its infancy, is not yet formally registered. Magcor’s public relations department did not respond to questions sent a fortnight ago. However, the company announced on its website that it was “now entering Botswana, Zimbabwe, Namibia, Mozambique and Congo DRC”.
Nkosikhona chief executive officer Jacco Immink referred questions to Verify chief executive Pedzisai Tapfumaneyi, who confirmed the development. Murwira also confirmed the issue, although he refused to divulge the stake Verify was holding.
There were questions over the technical capacity, track record, financial ability and suitability of Nkosikhona and Verify to implement the project considering that none of the companies have undertaken major infrastructure projects of a similar nature. There were also questions over whether government had thoroughly assessed the technical suitability of Nkosikhona, which was only registered in 2013 under registration number K2013/011831/07. Its directors are Immink and Caroline Makhoro who was once swindled R120 000 in a botched transport deal in South Africa.
The credibility and reputation of Immink and Makhoro were also under scrutiny.
According to Makhoro’s LinkedIn profile, she previously worked as a cashier for a fast-food outlet KFC Clabo Beleggings for nearly 10 years before partnering with Immink to form Nkosikhona. Prior to establishing the company, Immink had worked as a financial advisor with Liberty Life, a junior position within banking operations.
Officials, however, said Nkosikhona had cashed in on the deal after bringing on board Magcor to fund the project in a capital-for-equity deal, which has seen the Canadian consortium taking over.
The deal means that Nkosikhona basically played the role of facilitator between Verify and Magcor is reaping huge rewards. Murwira told the Zimbabwe Independent that government, through Verify would seek to increase its shareholding in Vectol Zimbabwe “over time” depending on obtaining circumstances.
“Vectol Zimbabwe is a new company we have formed with our partners who are Nkosikhona under Magcor. Maybe the equity will change from time to time. Maybe over time we will increase our stake,” Murwira said. “The shareholding structure remains confidential and I cannot divulge, that will be up to the directors. I do not think it is information that is of public interest. I know, but I am not going to get overexcited and divulge that.”
Tapfumaneyi confirmed that Magcor had seized control of the project, relegating Nkosikhona and Verify to the periphery.
“What is important to note is that the investment is coming as equity financing not loan to Zimbabwe, while the funders are financing the project 100%. It was premised on the bankability of the feasibility studies that were done over the past 14 years,” Tapfumaneyi said.
“The signing of the deal has born a company called Vectol Zimbabwe which is the company now executing the coal-to-liquid fuels and chemicals plant in Zimbabwe. Verify Engineering and Nkosikhona Holdings are no longer playing significant roles other than what has already been accomplished of bringing in the investment to the project.”
Verify Engineering was registered in 2004 under registration number 18188/2004.
According to records at the Company Registry, the firm has three directors, namely Vincent Hungwe, who is the Civil Service Commission secretary, Justin Mupamhanga (Deputy Chief Secretary in the Office of the President and Cabinet) and Francis Gudyanga (former mines secretary).
Tapfumaneyi said the project has been granted National Project Status — which implies importing equipment duty free — and was started in 2015 with government as the sole financier. He said implementation progressed at a snail’s pace owing to financial constraints and Harare’s low credit rating. Tapfumaneyi said exploration to quantify the exact coal reserves spread across the Zambezi River basin would commence in June, while securing the necessary regulatory approvals was “still ongoing”.
The coal-to-fuel beneficiation four-year project will be implemented on a build, operate and own arrangement.