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Mnanagwa's mega projects stall

by Staff reporter
22 Feb 2019 at 09:08hrs | Views
AFTER earning the uncanny title of "Mr Groundbreaking" for his vast portfolio of much-publicised investment "mega deals" which are taking rather too long to be implemented, President Emmerson Mnangagwa has earned a reputation as a leader who talks more than he delivers.

Critics now say Mnangagwa and his predecessor, Robert Mugabe, have something in common: a knack for creating a publicity blitz around investment deals which hardly ever take off.

With a campaign centred on economic reform and his "Zimbabwe is open for business" mantra, Mnangagwa has very little to show on the ground to match the rhetoric.

Ahead of the July 30 general elections, Mnangagwa promised to transform Zimbabwe into a friendly investment destination, a clean break from Mugabe's hollow anti-Western and pro-Chinese policies.

Since assuming power through a military coup in November 2017, Mnangagwa's administration has boasted that Zimbabwe attracted a staggering US$12 billion in foreign direct investment (FDI), mostly through various "mega-deals" signed during the course of last year.

But reality on the ground paints a far bleaker and contrarian picture.

According to the 2019 budget, Zimbabwe has over the past six years attracted FDI averaging below US$1 billion annually, while Mozambique's investment inflows peaked at over US$6 billion in 2013, before declining to US$2,3 billion in 2017.

Despite the much-touted billions of dollars in investment, numbers prove that Zimbabwe is still an unattractive investment destination, having raked in a paltry US$470 million in FDI in 2018.

Last year, Mnangagwa announced that his government had managed to secure US$5,2 billion from China Power and General Electric to build a 2 800-megawatt (MW) hydro-power generation station at Batoka Gorge in the Zambezi Valley. The project is yet to take off amid speculation that Chinese investors have developed cold feet over concerns that they would find it difficult to recoup their investment.

Mnangagwa last year called a press conference announcing that Australian-listed Invictus Energy would initially invest US$20 million to explore for oil reserves around the Muzarabani area. The figure was expected to increase to hundreds of millions of dollars depending on the availability of the resource, he said.

Invictus managing director Scott Macmillan told the Zimbabwe Independent this week his company would drill its first well in mid-2020. He said re-interpretation of seismic data would take longer than expected.

His comments suggest the project could be off-track as processing of large volumes of seismic data is likely to delay the entire project.

Invictus is utilising data gathered by energy company Mobil in the 1990s.This suggests the company has not invested a cent in new exploration.

"We are reprocessing the seismic data at the moment. We had the original field tapes stored at the Geo Survey in Harare transcribed to digital format. I guess the simplest way to explain it is that it is like remastering old records or films from their original recordings. The reprocessing will take a couple of months," Macmillan said.

Questions are swirling over the project, with Macmillan expressing concern over the unavailability of a drilling rig in Zimbabwe, a development he said could inflate the cost of the project.

"There are some rigs in Mozambique that have been drilling for Sasol, otherwise we will have to mobilise something from North Africa or Middle East. The initial exploration well will cost between US$10 million and US$20 million, depending on how much the mobilisation of the rig costs us," Macmillan said.

Last April, Mnangagwa parcelled out vast platinum claims to Lucas Pourolis through his Karo Resources investment vehicle to set up a refinery plant estimated at US$4,2 billion with potential to create over 100 000 jobs.

However, Bobby Morse, a senior partner at Tharisa Plc — a sister company of Karo Resources — disowned the US$4,2 billion figure in an interview with the Independent, suggesting the investment amount was plucked from thin air by government. The deal is yet to take off despite the euphoria around its groundbreaking ceremony was held.

Mnangagwa's administration in June last year also announced another controversial US$5,2 billion project with a murky South African outfit Nkosikhona Holdings to transform coal into fuel in the Zambezi Basin.

The deal involves at least five companies from Zimbabwe, China, South Africa and Canada is expected to solve the country's perennial fuel crisis.

Zimbabweans will have to wait a little longer for tangible results on the ground.

Higher and Tertiary Education minister Amon Murwira, whose ministry is responsible for the project billed to produce eight million litres of fuel daily told the Independent that the project would take longer to implement due to its complexity.

"We are now doing financials. Verify (Engineering, a technology company formed by the ministry) now has a board, so things are moving. These are huge scientific complex issues so people cannot expect things to be done in six months," Murwira said.

"It's a process, which will take five years, this is a scientific project, and right now I can say procurement has started. If you want operational issues and technical details you get them from Verify Engineering. It is now off the desk of cabinet and it is now off my desk. They should now start drafting the plant."

Murwira insists government had conducted due diligence on the project.

"But you must note that we do due diligence, and the country is not losing any money in this deal, Magcor is bring in all the money needed for the project and we have the coal concessions, this is a heritage-based project," Murwira said.

The murky deal involves Nkosikhona Holdings, a South African company registered in 2013 which has a questionable track record. Nkosikhona signed the deal with government through Verify Engineering Private in May.

Magcor — an engineering and international development consortium of companies registered in Canada with a presence in the United States, Philippines, China and Africa — has, however, effectively seized control of the project in a capital-for-equity deal with Nkosikhona.

The deal resulted in the creation of a new entity, Vectol Zimbabwe, which will implement the project. Magcor is the major shareholder in Vectol, while Nkosikhona and Verify will have insignificant roles.

A search at the Company Registry shows Vectol, was still in its infancy, and was yet to be formally registered. And in October Vectol roped in Chinese contractors, signing memoranda of agreements who are supposed to implement the project.

Last year, government also signed an agricultural deal with the Financial and Commodities Ecosystem (FinComEco) to the tune of US$1,5 billion, touted to directly create 630 000 jobs.

Source - the independent