Zesa in US$113m fresh tender scam

Source: Zesa in US$113m fresh tender scam – The Zimbabwe Independent August 12, 2016

…Chivayo awarded another dodgy deal

CORRUPTION-RIDDEN Zimbabwe Electricity Supply Authority (Zesa) is embroiled in a fresh tender scandal in which convicted fraudster Wicknell Chivayo was awarded another US$113 million deal on top his several others by the company’s subsidiary, Zimbabwe Power Company (ZPC), despite lacking capacity and resources to implement the project.

By Herbert Moyo

Documents seen by the Zimbabwe Independent, which of late has exposed a series of corruption scandals as per tradition, this week show Chivayo — already involved in other dodgy Zesa deals — was last year awarded a tender to refurbish Munyati Power Station despite that neither his company nor his Indian partners, Jaguar Overseas Limited (JOL), had the capacity and resources to undertake the power development scheme.

Chivayo’s company Intratrek, which has no previous experience or proven record in power projects, was awarded the Munyati contract on November 12 2015 to rehabilitate and modernise the 61-year-old thermal energy power plant to bring its generated capacity to 100 megawatts at a cost of US$113 182 627.

This is in addition to the US$200 million 100-megawatt solar power plant in Gwanda, Matabeleland South province, in which Chivayo was paid US$5 million without a required bank guarantee.

Zesa is currently reeling from a number of corrupt deals in which the country’s energy projects were given to shady businessmen with criminal records, ranging from fraud to drug trafficking.

The deals were inflated by more than US$500 million, raising suspicions Zesa executives and senior government officials, including ministers, are benefitting from the shady contracts which authorities are reluctant to investigate.

Chivayo is politically well-connected and has links with President Robert Mugabe’s family.

Documents show that just like Intratrek, Chivayo’s Indian partner JOL has no experience in power projects as it is “still new to power plants”, according to a due diligence report done by ZPC from February 21 to 24 this year.

To make matters worse, it has also emerged JOL has done some shoddy work or was blacklisted in several countries, including Zambia, Democratic Republic of Congo (DRC), Swaziland, Ethiopia and India, where it is facing litigation.

ZPC sent two teams to India to conduct some due diligence, one to examine the JOL/Triveni Consortium on technical matters and the other focusing on financial and legal issues.

The ZPC technical team comprised group leader Tichaona Nyandoro (technical compliance manager), Fannie Mavhondo (general plant manager), Fungai Sabvukutwa (section engineer maintenance), Victor Kufahakutane (section engineer operations) and Eric Mvududu (projects engineer).

Sanjay Gupta, a project engineer at Wapcos Limited, an Indian company which has previously worked with JOL on other projects, was also part of the team. The finance and legal team had ZPC finance director Muedzo Nebarwe and assistant company secretary Respina Zinyanduko.

Strangely, though, the due diligence was only carried out this year — three months after the deal was signed. The tender was awarded in November 2015. According to the due diligence report seen by the Independent, it was found that “JOL itself was not financially sound.”

“Its balance sheet as at 31/03/15 was worth US$88 million of which US$53 million were creditors and its capacity to secure funding and to undertake a project of this magnitude was therefore questionable,” reads part of the report titled Jaguar Overseas Limited Report. “The company also had huge overdrafts in two out of three of its bank accounts.”

The report further says although JOL’s Indian partner Triveni Turbines had “good technical standing, its balance sheet raised doubts on the adequacy of the assets to satisfy the potential funders.”

Triveni was found to have a balance sheet of US$85 million of which US$43 million were creditors. Therefore, “the combined net worth of JOL/Triveni Consortium was US$77 million which is less than the project value for Munyati Repowering Project (US$113 million)”

“Based on the findings, it was noted that it will be highly risky to engage JOL and the committee recommends that it would not be prudent to enter into another contract with JOL,” the report says.

“JOL alone neither has the experience of constructing power plants nor the financial capacity to absorb the high risk that comes with EPC contracts. The JOL/Triveni Consortium’s combined balance sheet which has a net worth of US$77 million is less than the value of the Munyati Project (US$113 million) and this raises doubt if this would be adequate to secure funding from potential financiers.”

According to ZPC, potential funders like Afrexim Bank and BancABC had after conducting their own due diligence on JOL committed to jointly fund only 15% of the total EPC cost.

The ZPC due diligence report also shows JOL has a history of shoddy work in Zambia, DRC, Swaziland, Ethiopia and India.

“It was also noted through internet (google) search that in most of these countries, Jaguar either did shoddy jobs or got blacklisted. There will be need to confirm on the ground the actual position of these projects from these countries,” it says.

The report also says JOL had concealed information that it was facing litigation in the courts in India along with one of its subsidiaries.

“JOL advised that there was none (litigation). However, on perusing their financial statements for 2015, it was noted that there was a case in which Jaguar Overseas and one of its subsidiaries was being sued in the High Court by M/s Jindal Drilling and Industries Limited… The value of the claim was not captured in the financial statements,” the report states.

JOL insisted that the case was finalised and closed after being quizzed further on the matter.

Munyati is one in a series of tenders controversially awarded to Chivayo and his dodgy foreign partners.

Despite song and dance at official signing ceremonies for the Munyati, Gaeresi and Gwanda power projects, nothing concrete has materialised to date.

Questions have been asked over the nature of the relationship between Chivayo and senior government and ruling Zanu PF officials, including Mugabe and his family, particularly First Lady Grace Mugabe, and Energy minister Samuel Undenge. Chivayo has previously been pictured in Dubai holiday jaunts with Grace. He has also been photographed with Mugabe and other members of his family.

In February, Undenge forced ZPC to unprocedurally pay Chivayo an advance of US$5 million for the Gwanda project.

The payment was made in the absence of a bank guarantee, a minimum requirement to protect public funds.
Undenge, who was struggling to pay US$350 maintenance for his daughter as recently as of December 2015, has of late seen his financial fortunes improve dramatically in the aftermath of payments to Chivayo.

In February Undenge received suspicious payments totalling US$186 000 through his personal and his wife’s bank accounts. Since then he has been embarked on costly refurbishments to his Glen Lorne home in Harare to turn the place into a mansion.

ZPC public relations executive Fadzai Chisveto was not reachable for comment on her mobile phone. Chivayo was also unavailable for comment.


  • comment-avatar
    shoko 6 years ago

    This is total abuse of public funds .

  • comment-avatar
    C Frizell 6 years ago

    Zim couldn’t organise a pissup in brewery.

  • comment-avatar
    SVINURAYI!!!!!! 6 years ago

    Nxu nxu nxu nxu nxu sori maningi Mugabe!!!?! Zvinonzwisa urombo izvi, iyi ndiyo inonzi tsvina ye hurumende!!! Smith better by far!!!!