ZESA Holdings is at advanced stages to meet conditions precedent for the proposed rehabilitation of the Deka project and the construction of a new 42-kilometre pipeline to draw raw water from the Zambezi River to Hwange Power Station.
Early this year, ZESA announced the project would kick off in June.
This came after signing a contract with an Indian consortium, Afcons-Vijeta Joint Venture, which won the tender to undertake the Deka project.
ZESA is yet to secure a letter of credit from a local bank and the contractor is yet to receive advance payment for it to undertake the project, which has been on the card for about eight years, according to acting spokesperson Prisca Utete.
“Commencement of main works awaits issuance of a letter of credit by a local commercial institution and advance payment to the engineering, procurement contractor. Efforts to satisfy these conditions are at an advanced stage. Main works will then commence once these two conditions are met,” Utete told Business Times.
She said the pre -commencement work on the project, including topographical survey and geo technical investigations had started in June.
However, the main works can only start after ZESA meets the two stringent conditions precedent.
The Deka station draws raw water from the Zambezi River and supplies the country’s largest coal-fired plant, Hwange Power Station, for electricity generation and cooling.
A new pipeline will also be constructed to draw water from the Zambezi River into Hwange Power Station and will augment the existing one.
It will also supply drinking water for the surrounding Ingagula community in Hwange.
The pump station has over the years deteriorated, giving rise to poor water supplies to the Hwange Power Station and the Zimbabwe National Water Authority treatment plant.
Initially, the tender to undertake the project had been given to an Indian contractor, Angelique.
However, the Exim Bank cancelled the tender in 2018 after Angelique failed to comply with the agreement as the latter wanted to implement the project in two phases rather than one, initially agreed by the governments of Zimbabwe and India.
The plan by Angelique would have seen the cost of the project ballooning by US$11m to US$39.6m from US$28.6m and this resulted in the Indian bank rejecting the proposal by Angelique because it differed from the original plan agreed by the two governments five years earlier.
An independent assessment report compiled by Mahindra, however, revealed that the expected cost to complete the project was now US$48.1m, creating a funding shortfall of US$19.5m from the initially agreed US$28.6m line of credit facility extended by the Exim Bank of India in 2013 at the behest of the government of India.
The government of India has since agreed to avail the funding gap amounting to US$19.5m.