Source: $300m Mphoko deal: Fresh details emerge – The Zimbabwe Independent June 24, 2016
“ZPC asked CMA whether it would be possible to scale down the interest, as it was of the opinion that the interest was too high. CMA pointed out to ZPC that they were investing their own funds in the transaction and given the funding cost, risk and the complexities of the deal the interest could not be scaled down.
VICE-PRESIDENT Phelekezela Mphoko’s son, Siqokoqela, was directly involved in structuring and negotiating a usurious US$300 million Zimbabwe Electricity Supply Authority (Zesa) loan which the VP was facilitating on behalf of Botswana’s Capital Management Africa (CMA), the Zimbabwe Independent can reveal.
By Elias Mambo
Mphoko’s son has an interest in CMA as a shareholder.
President Robert Mugabe blocked the deal, which would have seen Zimbabwe paying an extortionate US$70 million in interest on the loan. This comes as it emerged that last week Mphoko attempted to get cabinet to approve the loan.
Minutes of a Zimbabwe Power Company (ZPC) and CMA meeting held at the ZPC boardroom in Harare on October 13 2015 show that Siqokoqela, who holds a 5% stake in CMA, represented CMA alongside a T Marsland and V Utedzi.
The minutes show that in return for the US$300 million loan extended to Zesa for the refurbishment of the Hwange Thermal Power Station, ZPC was going to pay back the sum at an interest rate of between 18% and 20% per annum. ZPC was also going to export 100 megawatts of electricity from the national grid to Botswana in return for payment. The minutes further reveal that ZPC was not happy with the applicable high interest rate, but Siqokoqela and his team refused to budge.
“Following calculations by KPMG, the interest rate had come to 18-20% of the capital cost. ZPC asked CMA whether it would be possible to scale down the interest, as it was of the opinion that the interest was too high,” read the minutes.
“CMA pointed out to ZPC that they were investing their own funds in the transaction and given the funding cost, risk and the complexities of the deal the interest could not be scaled down.”
The deal was, however, blocked by Mugabe who also protested that the interest rate was too high and smacked of corruption. Zesa is seeking US$350 million in order to secure a US$1,2 billion loan facility offered by China Exim Bank to refurbish the Hwange Thermal Power Station.
The power utility is in a serious financial crisis as it is owed close to US$1 billion. It is also struggling due to mismanagement and corruption.
In January, China offered Zesa a loan of US$1,2 billion to refurbish the Hwange Thermal Power Station. The Chinese loan requires that government raises a substantial guarantee, of at least 15%, before accessing the facility, hence efforts to raise the US$350 million.
The minutes show that ZPC was required to supply power to Botswana Power Company which would pay on a monthly basis.
“CMA stated that they would prefer a situation wherein the power being sold in terms of the Power Purchase Agreement is coming from the grid and not from a particular power station,” the minutes say.
Siqokoqela worked as the head of business development at CMA from January 2008 to August 2013, starting when his father was still Zimbabwe’s ambassador to Botswana.
Questions remain over whether Mphoko abused his position as ambassador in Botswana when he cut deals for himself and his family to emerge as a partner in that country’s biggest supermarket chain, Choppies.
According to his LinkedIn account, Siqokoqela’s duties included, among many others, “establishing investment opportunities for our group in the form of development projects, infrastructural projects, and finance financial institutions such as banks”.
“CMA had Pula 2,6 billion (US$240 million) assets under its management and it was my job to find good investments for our group. I became a 5% shareholder of the company. CMA was the number one leading asset management company in Botswana and the only company that had the skills and expertise to manage annuity portfolios in the whole of Botswana,” Siqokoqela states on his account.
Mphoko’s deal comes at a time when the power company is rocked by tender scams.
As reported by the Zimbabwe Independent recently, Zesa is reeling from a series of scandals, including the US$194 million-a-year Dema diesel power plant deal (now US$83 million) which would leave the struggling ZPC and Zimbabwe Electricity Transmission and Distribution Company, another Zesa subsidiary, in deeper dire straits.
The corrupt deal, given to Mugabe’s in-law Derrick Chikore, elder brother to Simba who is married to the president’s daughter Bona, and Sakunda Energy boss Kuda Tagwirei, was later revised down by about 50% to US$83 million due to pressure.
Energy experts say ZPC could have saved approximately US$200 million over three years had it explored cheaper alternatives.
Zesa tender costs have been escalated by over US$500 million, raising corruption concerns.