Chivayo Rejects Mandiwanzira Claims About Gairezi Hydropower Project
Source: Chivayo Rejects Mandiwanzira Claims About Gairezi Hydropower Project ⋆ Pindula News Wicknell Chivayo has rejected claims by Nyanga South MP Supa Mandiwanzira that he failed to deliver the Gairezi 30MW power plant in the Tangwena area after being awarded the tender during the time of former President Robert Mugabe. Speaking at a recent ZANU-PF […]
Wicknell Chivayo has rejected claims by Nyanga South MP Supa Mandiwanzira that he failed to deliver the Gairezi 30MW power plant in the Tangwena area after being awarded the tender during the time of former President Robert Mugabe.
Speaking at a recent ZANU-PF rally, Mandiwanzira said that if Chivayo had built the dam and hydro-power plant as expected, local communities would have benefited through jobs and increased tourism.
However, in a post on his social media pages on Wednesday, 21 January, Chivayo said the Gairezi 30MW Hydro Project was not awarded to him personally.
He said the tender was given to a consortium led by a multi-billion-dollar, Indian government-owned engineering company. Said Chivayo:
“The tender for the Gairezi 30 MW Hydro Project was not awarded to ‘CHIVAYO’ personally, but to a consortium led by an Indian Multi-billion dollar Government-owned engineering conglomerate, BHEL (Bharat Heavy Equipment Limited ), working together with Angelique International Ltd, while Intratrek Zimbabwe (Pvt) Ltd participated as their local contractor.
“Like many local contractors across Africa, Intratrek rides on the CREDIBILITY, bankability and TECHNICAL CAPACITY of international OEM partners in order to achieve project delivery.
“In this case, that international credibility was precisely what made the consortium competitive and to be awarded the tender as the LOWEST compliant bidder to specification.”
Chivayo said the project could not proceed because of its high cost, which he estimated at US$113 million. He said:
“The fundamental issue that prevented implementation was challenges in achieving FINANCIAL CLOSURE.
“The project cost was USD 113 million for 30MW, which made the business case extremely DIFFICULT to finance when tested against the lenders’ requirements of Return on Investment, yield, asset return, plant load factor, and overall BANKABILITY.
“In simple terms, it is not enough to have a technically feasible hydro power plant.
“Financiers must be satisfied that the project has sustainable CASHFLOWS and repayment security.
“Unfortunately, the FINANCIAL MODEL struggled to meet that threshold.”
Chivayo said he lost money on the project, even though it never took off, due to the costly and lengthy bidding process, which required frequent international travel to original equipment manufacturers, mainly in India and other countries, before the final tender submission. He said:
“It is also important for both you and the general public to understand how projects like this actually work.
“Before any DISBURSEMENT is made, there are strict project finance requirements such as Letters of Credit, Advance Payment Guarantees, Performance Guarantees, supplier guarantees, OEM confirmations and technical milestones such as Factory Acceptance Tests and inspections for key equipment.
“As Contractors, we even incur substantial UPFRONT COSTS during the cumbersome bidding process for international travel to OEMs, often in India and elsewhere overseas, before the final tender submission.
“So if anything, Contractors also get DISAPPOINTED when projects stall, because we invest real money and expect a return out of it.
“We are always ready to execute because the more we CONSTRUCT and commission projects, the more we EARN through fairly reasonable margins.”
Chivayo said he received no payment from ZESA for the Gairezi project, as ZESA, through the government, prioritised high-yield power generation projects such as Hwange Units 7 and 8. He wrote:
“It is, however, understandable that in this case, ZESA, through Government, ultimately prioritised high-yield generation projects such as Hwange Units 7 & 8, which gave a total output of 600MW after project execution and commissioning.
“In simple terms, suffice it to say this explains why the Gairezi project and others such as Harare and Munyati Repowering Projects were held in abeyance.
“I therefore respectfully acknowledge your concerns as an Hon. Member, and I look forward to the project being REVISITED by the government and the most ideal funding structure being considered for its development.
“I hope this clarification assists the public to understand, and all those making SPECULATIVE comments suggesting that payments were made, should also be respectfully guided accordingly.”
