via Kariba power expansion project cost inflated: Biti 11 September 2014 by Paidamoyo Muzulu
MDC Renewal Team leader Tendai Biti yesterday attacked the Zanu PF government for deliberately inflating the cost of the Kariba South hydro-electric expansion project by nearly 60% and described the move as criminal and a means by corrupt politicians to enrich themselves.
Biti’s comments came barely a week after President Robert Mugabe flew back from a week-long State visit to China where he signed a number of project financings from the Asian giant.
The original Kariba South expansion project signed and sealed during the inclusive government had pegged the contract cost at $355 million, but the figure has ballooned to $533 million.
Zimbabwe Power Company is expected to borrow the difference of $213 million to complete the project.
“These people are corrupt and irresponsible for them to amend an agreed contract that I personally participated in negotiating during the inclusive government,” Biti said.
Biti was then the Finance minister and his ally Elton Mangoma was the Energy minister.
The Kariba South project had been delayed by more than two years now initially after a tender process had to be redone when it was discovered Sino-Hydro had been awarded the contract without following laid-down procedures.
Mugabe officially launched the project last week in the resort town of Kariba and it is expected to increase power generation by 300 megawatts to the national grid when complete in 2017. Biti added: “We don’t understand how all of a sudden the project costs have spiralled especially in a dollarised economy except some people are looking for ways to loot the state coffers.”
The inflating of costs comes hard on the heels of the irregularities discovered on the $144 million Harare City Council water project where the council has discovered that some of the project equipment was quoted five times higher than their market price.
These developments take place as the country’s debt now stands at $10 billion with prospects of defaulting high as the economy is stuttering.
COMMENTS
I have just finished doing a comparison cost of our KSB[Kariba South Bank] and KNB[Kariba North Bank] for single generator installation, the figures are roughly the same.KNB one generator installed cost Zambia $278 millions as of December last year whilst KSB will cost about $266.5 millions.I am assuming that the generators being installed are roughly the same types and outputs.Secondly, I am assuming that the terms of our contract are similar to the KNB contract[being implemented by the same company].
I am beginning to wonder whether or not the opposition parties are telling the truth or not.It is not easy to lie on technical projects because facts can be used to compare end results.This is why on my earlier comment on this project I doubted the number of jobs to be created.I suspect that only about 140 jobs will be created for the locals, if we use figures revealed by the Zambians.
I challenge Mr Biti to give us a detailed break down on the project he negotiated and signed so that we could challenge the current minister of energy to explain the so-called inflated pricing.
Kariba North Bank generators are bigger output-wise and that means everything else shud be bigger ie generator-transformers, aux transformers etc. i dont expect the cost to be same. Also the currency being used is US$, so issues to do with inflation etc shud not play a big part. i expect Zambian project to have cost almost double our price, which means Zim side shud cost about half plus or minus. the problem is everything to do china sails thru. lets not forget that on Zambian side everything was done from scratch. On Zim side tunnels and Halls underground were dug up in 1957 when Kariba dam construction commenced. So the cost be much less
Nudge nudge. Wink wink. Say no more.
I agree with Biti on this one. The final sum is way over what would be expected for this kind of project. The Kariba North project cost $278m for 360MW whilst the Kariba South cost a whooping $533m for 300MW.
Even the original $353m Biti is talking about was way too high because the cost for this project should be less than $300m at best. These guys get ripped off because they know they are not the ones paying the money back.
Its not like the Chinese are starting this project from scratch, they already have a head race tunnel etc. This South project is more electrical than civil and hence you would expects costs to be less.
This shows the importance of a competitive bidding process which Mugabe will not allow because they will get nothing from it.
Now future generations of Zimbabwean are burdened with this unnecessary debt driven by greed and corruption.
Please read the Zambian statement correctly because they commissioned one generator of about 150 megawatts for $278 millions .I tend to agree with @Mambo on other details,this is why ours is about $12 millions cheaper per generator installed.
addition and correction to above-generator of about 180 megawatts.This obviously makes it more expensive than our planned 150 megawatts per unit.It would appear like our side should save on labour,generators,transformers, overhead lines and switching gear costs since we are to generate less power from it compared to the Zambian side.My question is without the original contract terms-How are we to know what has been added or subtracted to make the figures different?It is very important that we the tax payers know what we are paying for.Is the approximate $24 millions less for our side compared to Zambian cost adequate to cater for the cheaper services I mentioned above or not?
there were more civil works on Zambian side costing $278M. Zim side there is much less works and the cost shud be much less. Equipment ie generators, transformers, switchgear etc etc shud definitely be cheaper considering the difference in Size. there are a lot of quetstions which need to be answered.
original deal was $353M but raising 15% of $353M = $52.95M shud not cost the nation $233M even with 100% interest on Loan. u work out the % yoself to see what’s happening
Zambia, Kariba Hydropower Plant, North bank extension
Description: This project is to expand the existing Kariba North Bank Power Station with extra 360 MW (2 x 180 MW).
Owner: Zambia National ZESCO LIMITED.
EPC contractual amount : USD 279 million.
Duration of works: Oct 2008-Oct 2012.
Financier: China Exim Bank provides 85% of credit loans
Zim is installing 2×150 MW units=300MW and the cost initially was $353M in total. its clear there is a problem cost-wise coz these smaller units and the value of US$ is almost constant.
2nd how can 15% of 353M = $52.92M eventually cost us $180M. sorry wrong cal’s earlier.
mixed race: will be in Gwr mthend, wud want to shake hands perhaps discuss things further. how can we meet???
At last I managed to access the Zambia EPC contract which gives total amount to be $420 millions for the whole works including the 2×180 megawatts generators.Maybe this Chinese company does not trust us as compared to our northern neighbour so they had to increase their escalation charges of 15% to 50% for bad customers.The $180 millions extra is equal to 50% of the original contract figure.
I happen to be in Byo,and if I give you my details here, I would compromise my security.I know that one day things will change for all fair minded people regardless of their tribe or race can meet and discuss issues freely as professionals.