$5m Chivayo payout: ZPC probes bigwigs

Source: $5m Chivayo payout: ZPC probes bigwigs | The Herald May 31, 2016

Felex Share Senior Reporter—
The Zimbabwe Power Company board is investigating how management unprocedurally made a down-payment of $5 million to Wicknell Chivayo for pre-commencement works on the 100 Megawatt Gwanda solar power project.The payment was made in the absence of a performance guarantee to give ZPC security to recover its money in the event that Chivayo’s Intratek Zimbabwe, which won the $200 million contract, fails to perform.

• There is nothing in place at the moment for ZPC to cover the risk and protect public funds.

The ZPC board has come under fire from corporate governance experts and Zimbabweans at large for its silence on the issue, despite Energy and Power Development Minister Dr Samuel Undenge and Zesa Holdings chief executive Engineer Josh Chifamba conceding violation of basic corporate governance tenets.

Experts have demanded action against the ZPC management given the strategic nature of the project to the success of Zim-Asset. ZPC board chairman Engineer Stanley Kazhanje yesterday said they were not protecting anyone and that appropriate action would be taken against culprits.

“We are investigating them and at the same time consulting our seniors on the direction to take because we are part of a group (Zesa Holdings),” said Eng Kazhanje. “The idea is to investigate first and take appropriate action. We have to carry out due diligence on the matter and also give everyone a fair chance,” he said.

“Our stakeholders are many and we are also carrying out a lot of big power projects. We would not want to appear as if we are protecting anyone. We have to show something, leadership qualities to be precise. We want to get the correct facts before taking action.”

Eng Chifamba has indicated that the power utility’s code of conduct would be applied on officials who erred, while Dr Undenge promised to get to the “bottom of the matter” as a bank guarantee should have been an “inevitable” aspect in the contract.

Said Dr Undenge: “It is true that each time public funds are advanced to service providers, there is a risk that the goods or service, as the case maybe, may not be delivered.” “To mitigate against this risk, it is a standard requirement that a bank guarantee is secured against possible failure to deliver.

“Such an inevitable requirement should have been considered in the case of the $5 million advance payment to Intratek by the Zimbabwe Power Company.

“In this regard and noting the many energy projects that we are embarking upon, it was necessary for me to engage both management and the ZPC board chairman on this issue. Common ground has been established on the same and in future, the relevant procedures and requirements shall be adhered to.”

He added: “Given the above, it is highly improbable or unlikely that there will be any real prejudice to the Zimbabwe Power Company in respect of this particular advance. Thus, in this ministry’s assessment, whereas the risk was there, in reality, there will be no financial prejudice and this is in no way exonerating those who erred.”

Corporate governance experts have said action is required as managers were turning critical parastatals and state owned enterprises into “petty cash entities”. Sources yesterday said the ZPC board was taking too long to act yet it was clear that management bungled.

“An effective board will not take that long to act on an irregularity,” said a soure within Zesa.

“Action was quickly taken on NetOne managing director Reward Kangai after irregularities were unearthed and he is on suspension because of action by the board. What is special about this management and board whose Minister and chief executive have admitted that what happened

should not have been allowed to happen? There has been an outcry from the public and what is needed is action.” ZPC is headed by Engineer Noah Gwariro. The $5 million was supposed to cover feasibility studies, topological surveys, way leaves, construction of administrative offices and fencing, among other issues.

Only feasibility studies and topological survey have been carried out so far.