News / National
Another Zesa scandal sucks in Mavhaire
11 Jan 2015 at 23:00hrs | Views
In an unprecedented move, former Energy and Power Development Minister Dzikamai Mavhaire instructed Green Fuel to construct a 49-kilometre power line and a substation in Chisumbanje in October 2013, without the knowledge of the Zimbabwe Electricity Transmission and Distribution Company board.
As a result, Green Fuel, through one of its companies, Rating Investments, is now demanding over $2,7 million from Zesa claiming it constructed the 33KV power line on behalf of the power utility.
However, Zesa says it was not aware of Mavhaire's directive, adding that had they constructed the power line on their own, it would have cost them less than $1,2 million.
Zesa argues that all independent power producers are financing the construction of their power lines feeding into the grid, with the power utility providing standards and specifications.
Green Fuel is a joint venture between Arda, Macdom and Rating Investments owned by business mogul Mr Billy Rautenbach.
The power line links Chisumbanje Power Station to the Mkwasine main feeder.
The Herald is in possession of documents that show that Green Fuel requested a dedicated feeder to Mkwasine and ZETDC quoted them $1,2 million in 2011.
"Green Fuel felt the quote was high citing limited cash flows due to low uptake of ethanol in the absence of statutory mandatory blending (then).
"This caused the commencement of the project to drag on for about three years. Green Fuel sought the intervention of Energy Minister Mavhaire in 2013," read the documents.
Mavhaire, together with his then deputy Engineer Munacho Mutezo, met Zesa officials and Messrs Rautenbach and Graeme Smith (Green Fuel) on October 11, 2013 in Chisumbanje in a meeting where the power utility's officials "categorically and equivocally stated its policy and position that the developer (Green Fuel) should wholly fund the project as they were the sole beneficiary."
Read the documents: "The Minister unilaterally went on to issue a press statement to the effect that Green Fuel was going to construct the line with its own funding and the costs were to be shared between Green Fuel and ZETDC, with the latter meeting its 50 percent through an offset of energy consumed by Green Fuel.
"In the absence of written instruction, ZETDC officials sought authority from the board through the directorate. The authority to enter into an agreement with Green Fuel to share the costs of the line was not granted."
However, with the Minister's backing, Green Fuel proceeded to construct the power line at a purported cost of $2 760 156.
Mavhaire yesterday cut off his mobile phone the moment he heard the journalist was from The Herald and later on it went unanswered.
In the documents, Green Fuel said it was ZETDC's obligation to construct the power line and take excess power from the Chisumbanje ethanol plant.
Other independent power producers such as Nyangani Renewable Energy Investments have established four power stations in Nyanga and funded construction of lines linking them to the grid.
Green Fuel stated that it had to source third party financing because "construction was to be completed in the shortest possible time to alleviate the country's power deficit."
The alleged financiers, Green Fuel claimed, continued charging them interest.
ZETDC responded: "There was never a time that ZETDC asked Rating to represent us neither did it ask Ratings to act on its behalf in undertaking this project. We are therefore not agreeable to the claim that Rating's construction of the line was on behalf of ZETDC.
"ZETDC deny the presented cost of the power line. The cost of $2 760 156 is far more than the engineers estimate of $1, 2 million for a similar design. We are not aware of any financiers who should be charging interest, we do not find ourselves liable to compensate Rating."
Green Fuel, the documents added, was failing to provide invoices and orders for the materials and equipment used during the construction despite several written requests by ZETDC.
Zesa said some items such as sundries and overhead expenses factored on the cost, amounted to 59 percent of the project cost but did not have direct bearing on the project.
In the documents, Green Fuel wants the $2, 7 million to offset Rating's electricity debt which stands at $2, 2 million, adding that it was always "being threatened with disconnections."
In response, Zesa said there was no relationship between the power line and the bills adding that by disconnecting Green Fuel it was simply "effecting our normal credit control measures."
"It is our firm belief that our respectable client is mixing up issues while inflating the cost build up to match his bill obligation to ZETDC. The sincerity of the client comes under spotlight on the backdrop of such similar antics when they refused to honour a bill component amounting to $797 583 070, which we ended up writing off," ZETDC said.
Green Fuel did not respond to questions sent to it last week.
Mr Reutenbach's phone was unavailable while Arda board chairman, Mr Basil Nyabadza, said he was not the right person to comment.
As a result, Green Fuel, through one of its companies, Rating Investments, is now demanding over $2,7 million from Zesa claiming it constructed the 33KV power line on behalf of the power utility.
However, Zesa says it was not aware of Mavhaire's directive, adding that had they constructed the power line on their own, it would have cost them less than $1,2 million.
Zesa argues that all independent power producers are financing the construction of their power lines feeding into the grid, with the power utility providing standards and specifications.
Green Fuel is a joint venture between Arda, Macdom and Rating Investments owned by business mogul Mr Billy Rautenbach.
The power line links Chisumbanje Power Station to the Mkwasine main feeder.
The Herald is in possession of documents that show that Green Fuel requested a dedicated feeder to Mkwasine and ZETDC quoted them $1,2 million in 2011.
"Green Fuel felt the quote was high citing limited cash flows due to low uptake of ethanol in the absence of statutory mandatory blending (then).
"This caused the commencement of the project to drag on for about three years. Green Fuel sought the intervention of Energy Minister Mavhaire in 2013," read the documents.
Mavhaire, together with his then deputy Engineer Munacho Mutezo, met Zesa officials and Messrs Rautenbach and Graeme Smith (Green Fuel) on October 11, 2013 in Chisumbanje in a meeting where the power utility's officials "categorically and equivocally stated its policy and position that the developer (Green Fuel) should wholly fund the project as they were the sole beneficiary."
Read the documents: "The Minister unilaterally went on to issue a press statement to the effect that Green Fuel was going to construct the line with its own funding and the costs were to be shared between Green Fuel and ZETDC, with the latter meeting its 50 percent through an offset of energy consumed by Green Fuel.
"In the absence of written instruction, ZETDC officials sought authority from the board through the directorate. The authority to enter into an agreement with Green Fuel to share the costs of the line was not granted."
However, with the Minister's backing, Green Fuel proceeded to construct the power line at a purported cost of $2 760 156.
Mavhaire yesterday cut off his mobile phone the moment he heard the journalist was from The Herald and later on it went unanswered.
In the documents, Green Fuel said it was ZETDC's obligation to construct the power line and take excess power from the Chisumbanje ethanol plant.
Other independent power producers such as Nyangani Renewable Energy Investments have established four power stations in Nyanga and funded construction of lines linking them to the grid.
Green Fuel stated that it had to source third party financing because "construction was to be completed in the shortest possible time to alleviate the country's power deficit."
The alleged financiers, Green Fuel claimed, continued charging them interest.
ZETDC responded: "There was never a time that ZETDC asked Rating to represent us neither did it ask Ratings to act on its behalf in undertaking this project. We are therefore not agreeable to the claim that Rating's construction of the line was on behalf of ZETDC.
"ZETDC deny the presented cost of the power line. The cost of $2 760 156 is far more than the engineers estimate of $1, 2 million for a similar design. We are not aware of any financiers who should be charging interest, we do not find ourselves liable to compensate Rating."
Green Fuel, the documents added, was failing to provide invoices and orders for the materials and equipment used during the construction despite several written requests by ZETDC.
Zesa said some items such as sundries and overhead expenses factored on the cost, amounted to 59 percent of the project cost but did not have direct bearing on the project.
In the documents, Green Fuel wants the $2, 7 million to offset Rating's electricity debt which stands at $2, 2 million, adding that it was always "being threatened with disconnections."
In response, Zesa said there was no relationship between the power line and the bills adding that by disconnecting Green Fuel it was simply "effecting our normal credit control measures."
"It is our firm belief that our respectable client is mixing up issues while inflating the cost build up to match his bill obligation to ZETDC. The sincerity of the client comes under spotlight on the backdrop of such similar antics when they refused to honour a bill component amounting to $797 583 070, which we ended up writing off," ZETDC said.
Green Fuel did not respond to questions sent to it last week.
Mr Reutenbach's phone was unavailable while Arda board chairman, Mr Basil Nyabadza, said he was not the right person to comment.
Source - the herald
