ZPC nails minister •’ . . . he pressured us to pay Chivayo $5m’ • Businessman admits failure to raise guarantee

Source: ZPC nails minister •’ . . . he pressured us to pay Chivayo $5m’ • Businessman admits failure to raise guarantee | The Herald June 1, 2016

Felex Share Senior Reporter
Energy and Power Development Minister Dr Samuel Undenge reportedly pressured the Zimbabwe Power Company to pay Wicknell Chivayo’s Intratek Zimbabwe $5 million in the absence of a bank guarantee to protect public funds.

Chivayo yesterday admitted to receiving payment without a guarantee as specified in the contract to construct a 100 Megawatt solar plant in Gwanda.

Chivayo said it was difficult for a local company to raise a bank guarantee, hence the decision to violate the contract.

It has also emerged that the ZPC management — for five months — refused to pay Chivayo in the absence of a bank guarantee, but later succumbed to pressure from Dr Undenge.

The minister yesterday denied interference and accused management of failing to follow laid down procedures.

“It is not true that I put pressure on ZPC management to pay Intratek. Management is aware of the laid down procedures they should follow when making any payment. Public funds have to be safeguarded.

“As minister, this is precisely the reason why I engaged ZPC management and the board chairman who have assured me that laid down payment procedures will be adhered to in various projects which ZPC will embark on.”

Chivayo yesterday sent unsolicited WhatsApp messages to this reporter admitting failure to provide a bank guarantee.

“I am a local company and how do you expect me to raise a guarantee? My Chinese partners (CHiNT Electric) will issue a guarantee for bigger figures with their eyes closed. This was just $7 million payment for pre-commencement works, they should be completed in six months. This project is also yours, but if the truth be told, you have successfully damaged it. This inevitable 100MW farm will also benefit you and your children in the future so no need to continuously fight the project.”

Clause 4.2 of the contract specifies the need for a performance bond to protect ZPC against any losses in the event Intratek Zimbabwe defaulted on the project.

The contract further specifies that ZPC will release money only after receiving an advance payment guarantee.

Chivayo gave a run-down of how the $5 million was being used at the site, but on being told that the problem was the absence of a guarantee, he responded: “I understand your point but where there is such a big contract, you both put your best effort to make the project a success.

“There is no $5 million exposure on ZPC, three quarters of that money is used and ZPC is happy. Make some time and pass by tomorrow so you understand. I won’t influence what you write but I feel you don’t understand the dynamics of an EPC project.”

Documents in possession of The Herald show that Dr Undenge ignored a red flag raised by engineers in his ministry who argued that inasmuch as the project was urgent, there was need for ZPC management to “remain professional”.

A ZPC official, speaking on condition of anonymity for fear of victimisation, said they had refused to pay Chivayo from October last year.

“We are being attacked for following a ministerial order,” said the official.

“The problem started in October last year when Intratek brought invoices seeking payment for the pre-commencement works without a bank guarantee. We refused and insisted that we cannot go out of the contract. The impasse dragged on for months and several emails, which we have, on the performance guarantee, were exchanged between ZPC and Intratek. Things took a new twist when the Minister, as he always does every Monday, summoned Zesa officials in February and ordered them to pay Chivayo. Fearing for our jobs, we could not resist. If the Minister has a problem with what we are saying, let him deny this and it is time for truth because we have been hit left, right and centre yet our hands were tied.”

In a letter dated November 17, 2015, an Energy and Power Development Ministry official Engineer Benson Munyaradzi (then acting permanent secretary) wrote to Zesa management advising them to remain professional.

This was after Intratek forwarded an invoice seeking payment for feasibility studies.

Wrote Eng Munyaradzi: “Of concern is the submission of an invoice by the contractor (Intratek), who has yet to submit the studies. If ZPC is paying for the work, then they should be in full control of the whole process, to the extent of engaging own consultant who is independent of the contractor. As much as (we) urgently need to implement this project, we should not compromise on our professionalism. Let us do the right things and not exacerbate the somehow flowed (sic) procurement process further.”

Dr Undenge chairs a meeting with Zesa officials every Monday.

The ZPC board, which was by-passed on the issue, meets once every quarter of the year.


  • comment-avatar
    Zambuko 6 years ago

    Dr Samuel Undenge does not understand responsibility and accountability. This is not a surprise as most of his colleagues and his principal have similar limitations.

    He is the relevant and responsible minister.

    If, as he claims, errant management is responsible then he should have taken appropriate action against them.

    I am inclined to believe his subordinates in this matter.