News / National
Chivayo, ZPC in negotiations to revive Gwanda Solar project
25 May 2024 at 07:38hrs | Views
The Zimbabwe Power Company (ZPC) and Intratrek Zimbabwe Pvt Ltd are negotiating to resume work on the proposed 100-megawatt Gwanda solar power facility, following a Supreme Court decision upholding the contract between the parties.
However, concerns linger about the potential for lengthy negotiations, considering that nearly nine years have passed with minimal activity since the solar deal's October 23, 2015 signing.
Last year, the Supreme Court ruled in favour of Intratrek, affirming two previous High Court decisions that went against ZPC's attempts to terminate the contract.
ZESA Holdings' Legal Advisor and Corporate Secretary, Tungamirai Chinhengo, explained the court's reasoning: "The Supreme Court judgment recognises that ZPC, a government entity, may have delayed payments to Sinosure (a potential financier). Intratrek, a private company, cannot be held accountable for these delays that impeded financial closure."
Chinhengo continued, "The court applied the legal concept of ‘fictional fulfillment' or ‘waiver of rights.' ZPC's delays resulted in a waiver of their right to cancel the contract within 30 days. This is the basis upon which the cancellation was overturned."
As a result of the court order, ZPC and Intratrek are currently negotiating how to proceed. The expectation is for both parties to reach a mutually agreeable amendment to the contract regarding technology, price, and timelines.
However, Chinhengo could not provide a concrete timeline due to the ongoing negotiations.
"There are two key reasons for the lack of a timeline," he said. "Firstly, a workable pricing model can only be established once financing details are finalized."
"ZPC has received various financing options, which I cannot disclose at this stage. These options will ultimately determine the project's timeline for financial closure."
Chinhengo acknowledged his limitations as a legal advisor when it came to predicting the completion of negotiations.
"From a policy perspective, I rely on the advice of the Managing Director," he admitted.
The acting ZPC Managing Director, Nobert Matarudza, expressed a more optimistic timeline, stating that "at best" the negotiations should not take more than six months.
However, this timeframe seems unlikely considering Mhangwa, chairperson of the Energy Parliamentary Portfolio Committee, Mhangwa indicated that six months lapsed around January 2025 and the acting MD's response suggested the negotiations could last for years.
However, the acting MD said other energy projects such as the expansion of Hwange seven and eight power stations, which had no legal challenges, took years to complete yet the contract was awarded in 2014 but the financial closure was achieved much later.
"The Hwange Seven and Eight where there were no issues like this one, took some years. You see if we had money as ZPC, which we can then use to fund this project it will be a different dimension altogether. But we're actually going to borrow money together with the EPC contractor," Matarudze said.
The legal advisor also weighed in that since the Supreme Court judgement held the contract valid, any engagement should be following the contract, so it could be "amended or varied, subject to both parties mutually agreeing to it and thereafter reducing into writing."
"The current engagements are within the scope and contemplated by the contract and if any resultant amendment is to take place, that is concerning the time frames, technology and contract price, all that will be done within the confines and ambit of the contract which fully provides for that," Chinhengo said.
The negotiations will include the contract price, as Chinhengo said " it is a practical issue which no one can technically run away from."
"The latest indications we are getting is that the contractor is also quite amenable to the idea of such price reduction, so it is a subject of the ongoing discussions. We are hopeful that we will agree on a price that is reasonable that is practicable in the circumstances, and overall that will give value for money to the government. "
ZPC Acting Project Technical Director, Engineer Forbes Chanakira added that due to the passage of time where technology is evolving and costs changing, these should be relooked at in the contract.
"Obviously in terms of the issues that we are engaging on, that will naturally be part of issues that we will also deliberate on to find a way of also incorporating the changes that are happening in terms of the technology globally. So basically yes, the changes in technology will be considered during the deliberation," he said.
However, concerns linger about the potential for lengthy negotiations, considering that nearly nine years have passed with minimal activity since the solar deal's October 23, 2015 signing.
Last year, the Supreme Court ruled in favour of Intratrek, affirming two previous High Court decisions that went against ZPC's attempts to terminate the contract.
ZESA Holdings' Legal Advisor and Corporate Secretary, Tungamirai Chinhengo, explained the court's reasoning: "The Supreme Court judgment recognises that ZPC, a government entity, may have delayed payments to Sinosure (a potential financier). Intratrek, a private company, cannot be held accountable for these delays that impeded financial closure."
Chinhengo continued, "The court applied the legal concept of ‘fictional fulfillment' or ‘waiver of rights.' ZPC's delays resulted in a waiver of their right to cancel the contract within 30 days. This is the basis upon which the cancellation was overturned."
As a result of the court order, ZPC and Intratrek are currently negotiating how to proceed. The expectation is for both parties to reach a mutually agreeable amendment to the contract regarding technology, price, and timelines.
However, Chinhengo could not provide a concrete timeline due to the ongoing negotiations.
"There are two key reasons for the lack of a timeline," he said. "Firstly, a workable pricing model can only be established once financing details are finalized."
"ZPC has received various financing options, which I cannot disclose at this stage. These options will ultimately determine the project's timeline for financial closure."
Chinhengo acknowledged his limitations as a legal advisor when it came to predicting the completion of negotiations.
"From a policy perspective, I rely on the advice of the Managing Director," he admitted.
The acting ZPC Managing Director, Nobert Matarudza, expressed a more optimistic timeline, stating that "at best" the negotiations should not take more than six months.
However, this timeframe seems unlikely considering Mhangwa, chairperson of the Energy Parliamentary Portfolio Committee, Mhangwa indicated that six months lapsed around January 2025 and the acting MD's response suggested the negotiations could last for years.
However, the acting MD said other energy projects such as the expansion of Hwange seven and eight power stations, which had no legal challenges, took years to complete yet the contract was awarded in 2014 but the financial closure was achieved much later.
"The Hwange Seven and Eight where there were no issues like this one, took some years. You see if we had money as ZPC, which we can then use to fund this project it will be a different dimension altogether. But we're actually going to borrow money together with the EPC contractor," Matarudze said.
The legal advisor also weighed in that since the Supreme Court judgement held the contract valid, any engagement should be following the contract, so it could be "amended or varied, subject to both parties mutually agreeing to it and thereafter reducing into writing."
"The current engagements are within the scope and contemplated by the contract and if any resultant amendment is to take place, that is concerning the time frames, technology and contract price, all that will be done within the confines and ambit of the contract which fully provides for that," Chinhengo said.
The negotiations will include the contract price, as Chinhengo said " it is a practical issue which no one can technically run away from."
"The latest indications we are getting is that the contractor is also quite amenable to the idea of such price reduction, so it is a subject of the ongoing discussions. We are hopeful that we will agree on a price that is reasonable that is practicable in the circumstances, and overall that will give value for money to the government. "
ZPC Acting Project Technical Director, Engineer Forbes Chanakira added that due to the passage of time where technology is evolving and costs changing, these should be relooked at in the contract.
"Obviously in terms of the issues that we are engaging on, that will naturally be part of issues that we will also deliberate on to find a way of also incorporating the changes that are happening in terms of the technology globally. So basically yes, the changes in technology will be considered during the deliberation," he said.
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