ZPC, Indian consortium seal Deka deal

PHILLIMON MHLANGA

An Indian consortium has won the tender to rehabilitate the Deka Pump Station and for the construction of a new 42km pipeline to draw raw water from the Zambezi River into Hwange Power Station for cooling and electricity generation, Business Times can reveal.

The consortium has Afcons Infrastructure Limited and Vijeta Projects and Infrastructures Limited.

The proposed pipeline will augment the existing one and will also supply drinking water for the surrounding Ingagula community in Hwange.

The Zimbabwe Power Company (ZPC) and the Indian consortium, which submitted the bid as Afcons-Vijeta Joint Venture, signed the contract three months ago.

ZESA acting spokesperson Prisca Utete confirmed the deal saying the two parties are finalising the fulfilment of conditions precedent.

“ZPC and the Indian Contractor, Afcons Infrastructure Limited and Vijeta Projects and Infrastructures Limited JV signed the contract on 21 January 2021 for the Deka Project.   ZPC and the Contractor are finalising the pre-commencement contractual obligations (conditions precedent) and until all such due processes are finalised, we cannot comment further,” Utete told Business Times this week.

The Export Import Bank of India (Exim Bank) is the financier of the Deka project.

The Indian lender will avail US$29m for the project.

The government of India recently introduced new guidelines for accessing funding under letters of credit supported by the Exim Bank of India.

The guidelines require that only Indian companies should qualify to undertake the project. The pre-qualification process on Indian companies should be done by the Exim Bank.

Analysts say the deal could solve the perennial water supply problem at Hwange Power Station, the country’s largest coal-fired power plant, which currently requires  about 3 500m³ of raw water per hour for power generation.

This may increase to about 6 000m³/hr when the two expansion units are in operation.

A Chinese contractor, Sino Hydro Corporation is undertaking the expansion project at Hwange Power Station, which would add two units with a combined generation capacity of 600MW to the national grid at a cost of about US$1.5bn.

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

The Government of India availed US$29m funding for the Deka project in 2013.

But, there were a number of teething problems.

Initially, the tender to undertake the project had been given to another Indian contractor, Angelique.

However, the Exim Bank cancelled the tender in 2018 after Angelique failed to comply with the agreement.

Angelique 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. 

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 earlier.

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 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.  This represents a 68.18% increase.

The government of India has since agreed to avail the funding gap amounting to US$19.5m.

Related Articles

0 0 votes
Article Rating
Subscribe
Notify of
0 Comments
Inline Feedbacks
View all comments
Back to top button
Business Times
0
Would love your thoughts, please comment.x
()
x