Govt gets partners for $5bn fuel project

Source: Govt gets partners for $5bn fuel project | Sunday Mail (Local News)

Vectol Zimbabwe – a joint venture between Government’s Verify Engineering and Nkosikhona Holdings, an investment vehicle of Magcor Consortium Group of Companies of Canada – has engaged contractors for the multi-billion dollar coal-to-fuels and chemicals plant in Lusulu (mid-Zambezi basin) and the coal-to-fertiliser plant in Mkwasine.

The grand projects are part of Government’s import substitution programme that is expected to significantly cut the import bill. The fuel plant will produce eight million litres of liquid fuels, which are sufficient to meet local demand. Estimates are that the projects could create more than 20 000 jobs in both upstream and downstream industries. Last month, a 12-member delegation was in China to carry out technical due diligence on the two Chinese firms, which have not yet been named as negotiations are still ongoing.

The parties signed memoranda of understanding and non-disclosure agreements, paving the way for pre-commencement work. Officials from the Chinese companies will be in Zimbabwe soon to conclude the agreements.

After facing difficulties transferring funds from project financiers owing to restrictions imposed by US sanctions on Zimbabwe, the parties have opted to use legal backchannels to move the funds.

The first tranche will be deposited with a local bank this week. Verify Engineering CEO Engineer Pedzisai Tapfumaneyi told The Sunday Mail last week that all regulatory approvals had been granted.

“The main purpose of the 10-day visit by a 12-member delegation of Vectol Zimbabwe was to carry out technical due diligence on Chinese companies that are offering technologies for coal-to-liquid fuels and chemicals, as well as on the coal-to-fertiliser project,” said Eng Tapfumaneyi.

“The companies were supposed to demonstrate their ability and proven track record in carrying out such projects and, in particular, their ability to integrate different types of licensed technologies in their front-end engineering and design as well as carrying out engineering, procurement and construction.

“The trip was also to expose the delegation to China’s capacity in the coal-to-liquid fuels, fertilisers and petrochemicals projects, with a view to establish technical partnerships. The main reason why we travelled to China was that China has become a leader in this field. According to the Gasification and Syngas Technologies Council, a trade association, there are 272 operating gasification plants globally today, out of which 69 percent are located in China. These are coal-to-liquid fuels, fertilisers and fine chemicals plants,” he said.

The Chinese, he added, were willing to facilitate technology transfer to Zimbabwe.

“The Chinese are willing to co-operate with us, especially in the New Dispensation, through providing technology and training to facilitate technology transfer to Zimbabwe. We are also happy to report that during the trip we managed to identify two contractors who will undertake the construction of our plant here in Zimbabwe.

“All stakeholders have now been fully consulted and are now on board to support this auspicious project.

“Once the identified technical partners have been fully taken on board for which the process is underway, the planning is that these projects should be officially be launched, announcing the start of implementation of the projects before year-end. The Mkwasine site is almost ready for launch, while more work has to be done for Lusulu, where the site is virgin.”

The quality of Zimbabwe’s coal deposits, particularly in the Zambezi basin, is sufficient to provide the key raw materials to produce fuels and petrochemicals, he said.