Court orders completion of Gwanda solar project - Zimbabwe Situation

Court orders completion of Gwanda solar project

Source: Court orders completion of Gwanda solar project | The Herald June 20, 2019

Court orders completion of Gwanda solar projectContractors work on a solar energy plant

Business Reporter
The High Court has ordered Zimbabwe Power Company (ZPC) and Intratrek Zimbabwe to engage and map the way forward regarding completion of the Gwanda solar power project, after granting the latter leave to execute the court’s earlier judgment declaring the contract between the parties valid.

Intratrek had applied for leave to execute High Court judge, Justice Tawanda Chitapi’s December 2018 ruling, pending appeal, over a contractual dispute regarding the Gwanda solar project, which was delivered in favour of Intratrek.
However, ZPC is contesting the judgment at the Supreme Court.

ZPC had purportedly cancelled the contract for the 100 megawatts solar project citing breach of contract, alleging Intratrek had not performed as agreed despite receiving payment without availing a bank guarantee as agreed.

In the latest appeal, Intratrek prayed for an order of specific performance saying the State power utility had frustrated the contract after causing the arrest of its director, Wicknell Chivayo, on trumped up criminal charges.

While ZPC denied causing the arrest of Chivayo, Justice Chitapi said records of allegations in the criminal case showed ZPC’s managing director was the complainant and as such, “an appeal court by an imagination cannot find otherwise”.
It also averred that it had faced challenges securing project finance from China due to legacy debts of the Zimbabwe

Government, which was the project guarantor, hence on its part had fictionally fulfilled its obligations.
Justice Chitapi said that he found no prospects of success by ZPC in its appeal against his judgment at the Supreme Court and no likelihood of irreparable harm to the power utility if leave to execute pending appeal was granted.

“In the result, I dispose of the application as follows; leave to execute the judgment of this court HH 818/18 is granted and the said judgment shall be given full effect notwithstanding the appeal noted by the respondent to the Supreme Court under case number SC2/19 on January 7, 2019,” he said.

Justice Chitapi said it was clear that the balance of convenience was in favour of granting leave to execute pending appeal as “what is to be executed is the contract by engagement of the parties”. Further, Justice Chitapi said that the project was of strategic importance.

“It has already been observed that the subject matter of the contract is of national importance. It is of public interest. The public wants electricity for use at home and in industries. The public is not interested in bickering for self-interest and egos on the part of State actors and their contractors,” he said.

“The project was granted national project status. The electricity envisaged to be produced upon successful completion of the project is not for the consumption of applicant and respondent, but benefits the whole nation since the power will be fed into the national grid,” the judge said.

Justice Chitapi said that while ZPC claimed that it had paid Intratrek US$5 million for pre-commencement works and for which the contractor did not deliver requisite value (which the contractor refuted), he did not rule on the issue, but simply referred the parties dispute back to them to resolve in terms of the dispute resolution mechanism in the contract.

He said there was no potential risk of prejudice to be suffered by ZPC from the granting of the leave to execute the earlier judgment pending appeal as the order simply stated that the contract between the parties was still extant and using provisions for dialogue and dispute resolution in the contract that the parties should engage and relate over the issue.

The High Court judge noted that if any prejudice was to be suffered, it was the cost of delays to the nation and national development, given the delicate balance between demand and supply of power in the country at the moment.

The High Court Judge said ZPC wanted to frustrate performance of the contract on realising that China Eximbank, as initially envisaged, would not provide project finance due to Government of Zimbabwe legacy debts, and it would have to carry the burden of project funding itself.

“Whether by judgment or wrong advice, (ZPC) has let the cat out of the bag. It is trying to clutch at straws to avoid potential liability payment,” Justice Chitapi said in his judgment.

The Government was the guarantor of the US$172 million Gwanda solar project, which was supposed to be funded by China Export and Import Bank (China Eximbank).

“The motive for appeal is improper. It is disgraceful that national projects are stalled by contracting parties having merry dances in board rooms instead of project sites and seeing the project to fruition,” Justice Chitapi noted.

Further, Justice Chitapi said he had to consider the potential irreparable damage to the contractor if he refused to grant leave pending appeal, as there continued to be potential injury to the contractor’s business interests.

While ZPC claimed that the contractor had failed to perform or deliver value, Justice Chitapi said he agreed with Intratrek’s argument that its failure to deliver on some milestones set in the contractor was a result of the conduct of ZPC.

On claims by ZPC that the High Court erred in its findings on construction of contractual obligations, Justice Chitapi said ZPC acknowledged in full liability to pay sub-contractors in full as well as the position that an advance payment guarantee was still to be availed.

“It is indisputable fact that at all times in the evolvement of the parties’ relationship in terms of the contract between them; the issue of advance payment remained topical.

“Payments were made in full knowledge that the issue of the advance payment guarantee was being pursued. In the premises, there was no fraud committed, as there was no misrepresentation made by either party nor alleged to have been committed.”

He said the issue of advance payment was never hidden at all times, as evidenced by the then State Procurement Board (SPB) agreeing to downward variation of the contract price to ensure financial close.

Further, he said Government also directed CBZ to raise funding locally because it was not able to clear its Chinese loan arrears, where the guarantee was supposed to come from.

 

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