PRESIDENT Emmerson Mnangagwa is on the verge of cancelling a US$600 million agreement, in which government had mortgaged 18 gold claims to a Malaysian company, ZimMal, which for 17 years failed to implement the Matabeleland Zambezi Water Project (MZWP).
The company recently sought audience with Mnangagwa to salvage the deal, which involved the construction of the dam and the two pipelines.
The project, touted as a solution to Matabeleland region’s perennial water problems due to recurring droughts, has been on the cards since 1912.
It was mooted by the colonial mastermind Cecil John Rhodes’s British South Africa Company (BSAC).
The first phase of the project involves the construction of the Gwayi-Shangani Dam, while the second phase will involve the installation of a pipeline from the dam to Bulawayo. The third and final phase involves the construction of a pipeline from the dam to the Zambezi River.
ZimMal was granted a contract to implement the project in 2003, but has failed to fulfill the contract, forcing the government to look for alternatives. Government then engaged China International Water and Electric Corp in 2018 to construct the dam.
Mnangagwa said last week the state had reserved the construction of the pipelines for locals.
The Zimbabwe Independent understands that ZimMal approached the Office of the President and Cabinet seeking to salvage the deal after Mnangagwa commissioned the construction of the Gwayi-Shangani-Bulawayo pipeline last week.
A confidential report presented to the Minister of State for Presidential Affairs in Charge of Implementation and Monitoring Joram Gumbo, exclusively in our possession, reveals that the minister is skeptical about the sustainability of the arrangement with ZimMal.
ZimMal, according to the report, expressed interest in financing the project, and was invited to work on the project by the then Rural Resources and Water ministry in 1997 on a Build-Operate and Transfer (BOT) basis. It was awarded the contract in 2003 but nothing was done until 2018.
The report further states that it was realised at the material time that the project, even on a BOT basis, would not be able to pay off the US$600 million by relying on water tariffs alone, resulting in ZimMal being given 18 gold concessions.
ZimMal was set to control 80% of the mining ventures while the government, through a designated ministry, would have a 20% stake.
“It is argued that the mining concessions were meant to provide comfort in lieu of the losses to be incurred in the implementation of the project. Besides gold, the mining concessions cover a wide range of other minerals such as silver, copper, manganese, nickel, emeralds and platinum among others,” the report reads.
Gumbo also urged Mnangagwa to give audience to ZimMal but advised him to cancel the deal.
“Given the facts enunciated above (in the report), I wish to advise that the request by ZimMal Holdings for an audience with Your Excellency be granted and a letter of invitation be extended in this regard. But given the recent developments on the project, the issue of the contracts signed in respect of the project must be openly and extensively discussed with representatives of ZimMal. If it is the decision of the government not to continue engaging ZimMal, the contracts should be terminated,” Gumbo advised.
“Your Excellency, in my view, the 18 gold concessions granted to ZimMal are not commensurate with the alleged losses to be incurred in the implementation of the project. In light of recent developments, it would be prudent for this issue to be discussed further with a view of cancelling the concessions granted to the company.”
Gumbo declined to comment on the report saying: “I cannot comment on matters concerning the OPC.”
Presidential spokesperson George Charamba said the government had lost patience with a company which sat on a contract for 17 years while the nation went thirsty.
“We spent 17 years waiting for the company to make a decision to undertake the project while the city (Bulawayo) is dying from thirst. Here is a company which has been sitting on a contract for so long suddenly springing up once we held a ground-breaking ceremony. The President will have to be too generous to even grant them the audience,” Charamba said.
“We have got a target to meet and in December 2022, we should be turning on the taps.”