via Solar projects hit by cost storm – The Zimbabwe Independent November 17, 2014
THE government has decided to re-tender the construction of three solar power plants aimed at generating a combined 300 megawatts of electricity after the three companies who had won the initial tender demanded a recosting of the project which would have seen Zimbabwe Power Company (ZPC) paying US$720 million instead of US$549 million.
Although government is moving to cut the costs, there are concerns the solar projects may not be the best option as the costs of implementing them far outweigh the benefits.
Stakeholders in the energy sector believe the money could be better spent on cheaper options such as upgrading the Hwange Thermal Plant.
The three companies, namely China Jiangxi Corporation (CJC), ZTE Corporation and Intratrek Zimbabwe (Pvt) Ltd owned by Harare businessman Wicknell Chivayo, were awarded the initial tenders to construct three solar plants each generating 100 megawatts at an initial cost of US$183 million, bringing the total cost to US$549 million.
However, the three companies later demanded an upward revision of the cost to US$240 million each bringing the total for the combined project to US$720 million representing an increase of US$181 million, hence government’s decision to re-tender.
“The solar projects are being re-tendered and six companies are now bidding,” said a government insider who spoke to the Zimbabwe Independent this week before adding “there are concerns that the costs are likely to outweigh the benefits as millions of dollars will be wasted on technology which is untried and untested.”
The source said there was consensus that it would be cheaper to invest more money in the refurbishment of Hwange Thermal Station, where US$400 million will suffice to produce the additional 300 megawatts, representing a saving of US$320 million.
“There are voices within the energy ministry and ZPC that are arguing that it would be more sensible to fund tried and tested alternatives including the Hwange Thermal project which would in fact require only US$400 million to produce that additional 300 megawatts.”
“Solar will require much more money to produce and there may well be a lot more unseen additional costs. Also important to note is the fact that the electricity will only be produced during daytime. There are fears that the scheme is simply being pushed through to create another feeding trough for politically connected individuals to siphon more money from an already cash-strapped government.”
ZPC initially earmarked the construction of one plant by CJC before the other two companies were roped in, in a development which would have serious financial implications for the company already burdened with the implementation of the Kariba South Extension Project whose cost also ballooned from US$355 million to US$533 million.
Former cabinet ministers Tendai Biti (Finance) and Elton Mangoma (Energy) publicly stated that there was no justification for the escalation of the Kariba project costs, suggesting that corrupt government officials were pocketing the US$178 million difference.