Two Indian firms submit bids for Deka Project

Phillimon Mhlanga

Two Indian contractors have submitted bids to rehabilitate the Deka Pump Station and for the construction of a new pipeline to augment the existing one to draw raw water from the Zambezi River into Hwange Power Station for electricity generation.

The proposed new pipeline will also supply drinking water for the surrounding Ingagula community in Hwange.

Hwange Power Station, the country’s largest coal-fired power plant, currently requires 3 500m³ of raw water per hour (hr) and this may increase to about 6 000m³/hr when the two expansion units are in operation.

The Deka pumping system, however, has over the years deteriorated, giving rise to poor water supplies to the Hwange power plant and the Zimbabwe National Water Authority (ZINWA) water treatment plant.

Energy and Power Development Minister Simon Moyo recently disclosed to Business Times that two Indian companies vying to undertake the Deka project have since been shortlisted.

“The government of India introduced new guidelines for accessing funding under LOCs (letters of credit) supported by the Exim Bank of India,” Moyo said.

“The guidelines require that a pre-qualification process on Indian companies be done by the bank (Exim Bank). Two Indian companies have since been pre-qualified and tendering amongst the companies is now in progress.”

Moyo refused to disclose the identity of bidders when Business Times contacted him this week.

“Well I am not in the office; we are busy preparing for the inauguration (of the President elect Emmerson Mnangagwa). Let’s about these (bidders) next week,” he said.

Well-placed sources at the power utility confirmed the latest development to the Business Times.

“So, far two Indian firms who are vying to undertake the project (Deka) have submitted their bid and its now under adjudication,” one source told this publication.

Contacted for comment, Patrick Chivaura, the acting managing director of the Zimbabwe Power Company (ZPC) declined to reveal the identities of the two bidders. ZPC is currently undertaking due diligence in order to come up with the winning bidder, “Unfortunately, we are currently not in a position to divulge information concerning the tender bids before the process is finalised,” Chivaura said.

“We are guided by the Public Procurement and Disposal of Public Assets Act: Chapter 54 (which says that) a procuring entity shall take all necessary steps to ensure that information relating to the content of pre-qualification applications and bids or the examination, clarification, evaluation and comparison of bids, is not disclosed to supplier, contractors, service providers or consultants or any other person not officially involved in the examination, comparison or acceptance of bids.”

The latest development comes after the Export Import Bank of India (Exim Bank), the financier of the project, early this year cancelled the tender awarded to an Indian contractor, Angelique, due to non-compliance with an agreement. The Indian bank availed almost $29 million for the project.

Angelique wanted to implement the project in two phases rather than one phase initially agreed by the governments of Zimbabwe and India. This would have seen the cost of the project ballooning by $11 million from $28,6 million to $39,6 million. The rise in costs resulted in the Indian bank rejecting the proposal by Angelique because it differed from the original plan agreed by the two governments five years ago.

Exim Bank engaged an Indian firm called Mahindra to carry out an independent assessment of the costs of implementing the Deka project.

An independent assessment report compiled by Mahindra, however, revealed that the expected cost to complete the project is now $48,1 million, creating a funding shortfall of $19,5 million from the initially agreed $28,6 million line of credit facility extended by the Exim Bank of India in 2013 at the behest of the Government of India.  This represents a 68,18 percentage increase.

The Indian bank undertook a fresh tendering process which is now expected to be concluded before the end of this month.

The governments of India and India have, however, since given ZPC the go ahead to implement the project, according to well-placed sources at ZPC.

“The government of India has since agreed to avail the funding amounting to $19,5 million, meaning ZPC  can now go ahead  and implement the project,” a well-placed source said.

Hwange Power Station, which has reached the end of its design lifespan of 25 years, is currently using six units.

But, there are plans to add two units with a combined generation capacity of 600 megawatts at a cost of $1,5 billion.
A Chinese contractor, Sino Hydro Corporation, is undertaking the expansion project at Hwange Power Station.

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