Indian financier cancels Deka project tender, orders fresh process

Source: Indian financier cancels Deka project tender, orders fresh process | The Financial Gazette September 14, 2017

By Phillimon Mhlanga, Business Reporter

THE Export Import Bank (Exim Bank) of India, which recently completed an independent study to assess the cost of rehabilitating Deka
Pump Station and construction of a new pipeline, has cancelled the tender awarded to Angelique due to non compliance with an agreement.

The rehabilitation of the Deka Pump Station and pipeline, which draws water from the Zambezi River to Hwange Power Station for electricity generation, entails the refurbishment of the pump station and provision of a new pipeline.
The new pipeline will augment the existing one, which will also be rehabilitated under the project.
Angelique, an Indian contractor, wanted to implement the project in two phases rather than one phase initially agreed by the governments of Zimbabwe and India. This would have seen the cost of the project ballooning by 36,36 percent or US$11 million from US$28,6 million to US$39,6 million.

This resulted in the Indian bank, which availed almost $29 million for the project, taking the decision to undertake
a due diligence on Angelique’s proposal, which it has now rejected.
The Financial Gazette can report that a fresh tendering process has been ordered and is expected to be concluded by the end of this month.

The Zimbabwe Power Company (ZPC) confirmed the development. “The Deka project is set to resume and tenders are being floated as per the new Exim Bank of India guidelines. The tender process is targeted to end in September 2017,” said ZPC.
In 2013, the Exim Bank, at the request of the Government of India, availed a line of credit to ZPC, a generating unit of ZESA Holdings, for the refurbishment of Deka and the construction of a new pipeline to draw water from the Zambezi River, to Hwange Power Station for electricity generation. This was to be implemented in one phase. This resulted in Exim Bank launching an independent assessment into the project in January this year as part of its
due diligence.
The Financial Gazette understands that the cancellation and re-tendering process of the project has since been approved by the two governments.

The 42-kilometre Deka pipeline brings raw water from the Zambezi River into two reservoirs with a capacity of
150 000m³. The pipeline also supplies drinking water for the surrounding Ingagula community. However, the pumping system has over the years deteriorated, giving rise to poor water supplies to the Hwange power plant and the water treatment plant.

Hwange Power Station currently requires 3 500m³ of raw water per hour
and this may increase to about 6 000m³/ hr when the expansion units are in operation.
The country’s largest coal-fired power plant, which has reached the end of its lifespan of 25 years, is currently using six units.

But there are plans to add two units with a combined generation capacity of 600 megawatts at a cost of US$1,5 billion.

A Chinese contractor, Sino Hydro Corporation, which won the bid to undertake the expansion work and ZPC have not reached financial closure on the project.