via Sino-Hydro defends prices | The Herald February 12, 2015
Sino-Hydro Corporation, the company contracted for the expansion of Kariba South Hydro and Hwange Thermal power stations, has defended its pricing regime for the projects it is conducting in the country. This follows concerns raised by The Herald yesterday that Chinese firms could be taking advantage of Zimbabwe’s economic challenges to inflate prices for projects involving State parastatals and enterprises compared to other countries in the region and private companies here.
In a statement yesterday, Sino-Hydro Corporation said the actual value for the Engineering, Procurement and Construction (EPC) of Kariba South Expansion was $355 million.
“The amount of $533 million referred to the overall cost of the project, which not only includes the value of EPC contract, but also the money Zimbabwe Power Company spends on paying consultancy firms and on securing bank loans. But for Sino-Hydro Corporation’s concern, our EPC contract only amounts to $355 million,” read the statement.
Sino-Hydro Corporation was also contracted by Zambia’s power utility to expand power generation on Kariba North by 360 megawatts for $278 million in 2008.
But the firm defended the price discrepancy arguing that the scope for the two projects was different.
“The construction of Kariba North Power Extension project started in 2008, while the construction of Kariba South Power Extension project only began in 2014.
“There is a six-year gap in between during which the cost of labour and machinery vary.
“The Kariba North Power Extension project was duly constructed in full 48 months. But for Kariba South Power Extension, we took consideration of the strong demand from Zimbabwe Power Company to shorten the construction period in order to increase power generation in shortest possible time. The construction period was cut to 40 months.
“Accelerating the project leads to a mark-up of the cost.
“It is also worth noting that prior to its construction, the Kariba North Power station had reserved the space to house the extension facilities and actually had part of the extended facilities in place.
“But for the Kariba South Power Station, we have to start anew, building everything for the power extension from ground zero.
“The extra work nevertheless leads to additional costs,” said the firm.
COMMENTS
In case some of the readers have forgotten about this project which was extensively debated last year on the 11 of Sept.At that time it was mentioned by @mambo that civil works on our side of the bank was done during the construction of the dam but not on the Zambian side.This company is saying the opposite to justify high costs including labour and so-called dollar changes in 6 years.
I do not accept this cheap excuse because the US dollar has not devalued much in the past 6 years.The fact that it will take 8 months less to complete is a clear indication that there is less civil works to do on our side.
If we dig deeper on the countries economies we can see that China’s economy has slowed down whilst the USA economy is picking up steadily.Is this just a coincidence that our contract cost higher than that of the Zambians with bigger generators?Our labour rates have not changed much because of our very poor economy,so what are they talking about.
This manager must find better reasons for this high cost.