Source: Dodgy companies get money-spinning deals – The Zimbabwe Independent August 26, 2016
MORE improprieties and shady backgrounds have emerged in Zimbabwe’s energy power deals as it surfaced that virtually all companies that have been awarded tenders have been beneficiaries of corrupt deals with irregularities ranging from inflation of prices, awarding of contracts to companies with neither experience nor capacity and some to elements with criminal records which include fraud and drug trafficking.
By Herbert Moyo
This comes at a time when the energy deals, as reported by the Zimbabwe Independent, have been inflated by more than US$500 million, possibly to benefit the companies as well as corrupt government officials.
Apart from convicted fraudster Wicknell Chivayo who secured the largest chunk of the energy contracts for Intratrek Zimbabwe, background checks reveal foreign firms like Chinese company ZTE Corporation were also awarded tenders despite being mired in serious corruption scandals in several countries where they had been engaged for other projects.
ZTE was one of three companies, including Intratrek, which won controversial tenders to build solar power stations.
Norway’s sovereign-wealth fund, the world’s largest, in January excluded ZTE from its portfolio after assessing corruption allegations made against the telecoms equipment-maker in several countries.
“The company is excluded based on an assessment of the risk of severe corruption,” said Norway’s central bank, which has the final word on ethically-based exclusions.
The decision was based on an assessment by the fund’s Council on Ethics which said the Chinese company is facing corruption allegations in 18 countries while under formal investigation in 10 other countries. In addition, the company has one conviction for corruption, it said.
ZTE has also fallen foul of American laws amid revelations by the Financial Times in April that some of its senior officials were listed in US commerce department documents accusing ZTE of acting as a conduit for the re-export of sensitive US technology to Iran in violation of United States legislation.
Another recipient of the solar tender China Jiangxi Corporation (CJC) also has a history of conflict with workers.
In 2010, Ghanaian workers accused CJC of wrongful and frequent dismissals, under payment, failure to provide them with safety gadgets and payment of compensation. The workers had been engaged after the company won a tender to refurbish the Akatsi-Tadzewu-Dzodze-Akanu road in the Volta Region.
Angelique International, one of the companies awarded the 30 megawatt Gairezi Hydro Power Project (March 2016) along with Intratrek, has also been accused of impropriety in its home country of India. In February, the company was among those investigated on suspicions of paying kick-backs to corrupt government officials in India in order to obtain soft loans for financing projects in Africa.
Below is a summary of some of the recent scandals in the energy sector:
Munyati Thermal Energy Power Plant (November 2015)
The US$113 million project to rehabilitate and modernise the 61-year-old power plant to bring its generation capacity to 100 megawatts was awarded to Intratrek, which has no previous experience or proven record in power projects;
Intratrek partnered Indian firm Jaguar Overseas Limited (JOL) who also lack experience and funds for such a project;
JOL had already made an unsuccessful application for US$52 million funding to the Exim Bank of India for another project- the Harare II Repowering Project whose total cost is US$70 million;
JOL, according to a due diligence report done by the Zimbabwe Power Company this year, has no experience in power projects as it is “still new to power plants”; and
The due diligence also highlighted that JOL has done some shoddy work or was blacklisted in several countries, including Zambia, Democratic Republic of Congo (DRC), Swaziland, Ethiopia and India, where it is facing litigation.
US$70 million Harare II Repowering Project (August 2014)
The project was awarded to Indian firm JOL despite its lack of experience and lack of funds;
The company has been unable to implement the project to date thus raising questions as to why Zesa awarded Intratrek and JOL the more costly Munyati (US$113 million) project;
The Kariba South Power Extension project
The project was officially commissioned by President Robert Mugabe in September 2014. It was initially pegged at US$355 million, but shot up to US$533 million. The cost escalation was US$178 million.
US$128 million30 megawatt Gairezi Hydro Power Project (March 2016)
The Gairezi Project was awarded to a consortium led by Intratrek. The company is partnering Indian firms Angelique International and Bharat Heavy Electricals Limited in the project.
Costs were inflated from US$90 million to US$128 million.
US$240m 100-megawatt Gwanda Solar Power plant (2014)
The tender was awarded to Intratrek, which initially lost the bid to China Jiangxi Corporation (CJC), but eventually got a piece of action when government decided it needed two more solar plants. Eyebrows were also raised when the project cost was raised from US$183 million to US$240 million per plant, representing an escalation of US$181 million for all three projects; and
In February, Energy minister Samuel Undenge forced ZPC to unprocedurally pay Intratrek an advance of US$5m for the Gwanda project. The payment was made in the absence of a bank guarantee, a minimum requirement to protect public funds.
US$83-million-a-year 200 megawatt Dema Diesel Power Project (2016).
Initially, pegged at US$194-million-a-year, the project was awarded to Sakunda, owned by Zanu PF benefactor Kuda Tagwirei who partnered President Robert Mugabe’s in-law, Derrick Chikore, and other high-profile cronies without the company going to tender. Derrick is brother to Simba who is married to the president’s daughter Bona.
The tender was initially won by American power company APR Energy Holdings before it was corruptly taken away and awarded to Sakunda.
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