HARARE City Council (HCC) has terminated a memorandum of understanding (MoU) it signed with Dutch company Integrated Energy BV (IEBV) in May for the construction of a US$134 million waste-to-energy incinerator at the Pomona dumpsite on the outskirts of Harare after the firm demanded an upfront payment running into millions of dollars, it has emerged.
This is despite the fact that IEBV had indicated it had the capacity to raise the full amount required for the construction of the incinerator on a 30-year build, operate and transfer (BOT) arrangement.
It also emerged that the councillors were worried about the company’s weak profile after their background checks, which raised doubts about its capacity to undertake a project of that magnitude.
Councillors were particularly worried about the fact that IEBV has only undertaken one similar project in Albania in 2017 after winning a tender which became controversial.
The findings by councillors, who sat in a joint meeting of the council’s environmental management and finance committees on June 24 to map the way forward, tally with the Zimbabwe Independent’s investigations outcome which revealed that IEBV lacked capacity and had participated in a deal which resulted in the Balkan country’s Prime Minister, Edi Rama, sacking half his cabinet (14 ministers) in response to the massive protests triggered by the deal.
Harare town clerk Hosiah Chisango confirmed the latest developments this week, saying council was put off by IEBV’s demand for money ahead of commencement of the project.
“It is true that we had entered into an MoU with IEBV, but as you know this was not a memorandum of agreement and there has not been any commitment on our part yet. The MoU was meant to pave way for negotiations with them,” he said.
“What then happened is that as negotiations went on, we realised that what they had promised was not what we wanted.
When they initially approached us, they indicated that they were ready to meet our requirements. We had clearly indicated to them that we wanted a build, operate and transfer model whereby they would fund the construction of the incinerator and operate it for 30 years before handing it over to council. However, subsequently, we learnt that we were supposed to pay some amount and we could not agree with that arrangement,” Chisango said.
Harare signed an MoU with IEBV despite an ongoing tender process at the instigation of the Local government ministry.
Chisango refused to disclose the amount of money which IEBV wanted, but indicated that it “ran into millions of dollars”.
Official council documents also indicated that the joint Environment and Finance committees asked Chisango to look for another investor.
Minutes of the joint committees meeting, in the possession of the Independent, further indicate that the city fathers had expressed concern that the company had no offices in Zimbabwe or anywhere in Africa.
“The joint committee enquired whether the company was locally based, whether the project had been carried out anywhere in Africa and whether the company had funding. With regards to IEBV’s previous projects of a similar nature in Zimbabwe, the company’s representative reported that the company had not been localised but was in the process of being localised. There had not been any project done in Africa, but the company wanted to implement the project in Ghana and Zimbabwe. The only pilot project (which IEBV undertook) was in Eastern Europe,” council minutes read.
“After the presentation, the committee expressed concern; the committee accordingly tasked the town clerk to assess other potential partners.”
The Independent had previously learnt, and reported, that from a number of earlier reports in Albania, that IEBV was registered as Postbox Company in 2016 and it is difficult to contact them.
The Independent last week checked with Dutch journalist Van Gerven Oei, who has written extensively on IEBV deals. He revealed that the company — co-founded by an Albanian national with Dutch citizenship, Klodian Zoto — does not even have physical offices in its country of origin.
“They are a shell company whose offices do not really exist. Their address in Netherlands is a so-called postbox office managed by an administration company. They cannot be contacted directly. Their office address is Hoogoorddreef 15, 1101BA Amsterdam, but no one actually works there,” Van Gerven Oei said.
The Independent also reported that IEBV has a history of involvement in controversial deals.
For instance, an article published in an Albanian newspaper called Exit, dated October 2 2017, stated that IEBV controversially won a tender for the construction of a third incinerator outside the country’s capital that year.
The company was declared a winner in a race without competition, on the back of an eight-point bonus.
The contract was controversially awarded in a deal in which the company would have managed the project for 30 years.
According to the Albanian press, IEBV was the only company which took part in the tender, making an offer of around €128 million (US$143,4 million). The Albanian press also reported that its proposal to build the incinerator in Tirana was sent to that country’s ministry of environment just three months before it officially existed as a company.
After reviewing the unrequested offer, the council of ministers decided to open a tender procedure on December 7 2016, making sure that IEBV received a bonus of 8%, basically guaranteeing that it would receive the concession.
The deal led to huge street protests in Verri, a suburb adjacent to the waste incinerator outside the Balkan nation’s capital, Tirana in January last year. Protesters wanted the deal to be cancelled, arguing that the company was being paid huge amounts of money despite doing a shoddy job, according to the Albanian Daily News.
On December 27 last year, Albanian Prime Minister Rama sacked half his cabinet (14 ministers) in response to the massive protests. They included the country’s former finance minister Arben Ahmetaj, who was identified by the press as having influenced the deal because he was Zoto’s friend.