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300MW solar tender cancelled in Zimbabwe


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Lloyd Gumbo Harare Bureau
THE State Procurement Board has cancelled the 300 Megawatts solar projects indefinitely after one winning bidder increased its price, while Zimbabwe Power Company (ZPC) failed to agree with two other firms that had been considered for the other solar plants.
This effectively leaves the government’s quest to find a quick solution to power crisis in the country in disarray as it had hoped that 300MW would be fed to the national grid by next year.

The SPB awarded a tender for a 100MW solar plant in Gwanda to China Jiangxi Corporation, which was the lowest bidder to specification at about $184 million.

However, they then made a U-turn by approving a request by ZPC to engage two other losing bidders — Intratrek Zimbabwe and ZTE Corporation — despite the fact that they had charged $248 million and $358,3 million respectively at the initial tender for 100MW project each.

The ZPC claimed the two firms had agreed to match the $184 million charged by China Jiangxi Corporation.

But correspondences seen by our Harare Bureau indicate that the SPB then cancelled all the three tenders.

SPB principal officer, Cledwyn Nyanhete, on July 31, 2014, wrote to China Jiangxi Corporation managing director cancelling the tender award after the firm requested to increase the price from $184 million to $207 million.

The firm argued that the new price included duties and taxes, a position the SPB dismissed, arguing that the costs were already catered for.

Nyanhete said the reasons for increased costs were not justifiable and in contravention of Section 39 (1) (b) of the Procurement  Act.

“Accordingly, through PBR 0001J of July 17, 2014, the State Procurement Board resolved that; PBR 0001 of January 16, 2014 in favour of China Jiangxi Corporation Ltd for funding, engineering, procurement and construction of 1x100MW solar power project at Gwanda/Plumtree be and is hereby cancelled for failure by the winning bidder to maintain their original tender price of $183,708,238.51 (inclusive of duties and taxes),” said Nyanhete.

“China Jiangxi Corporation for International Economic and Technical Cooperation Ltd should within 14 days of notification pay $900.00 administration fees in line with S.I 159 of October 12, 2012 for violation of Section 39 (1) (b) of the Procurement Act by misrepresenting a material fact in a tender process.

“The board further resolved that you be warned against violation of procurement procedures in future as this may result in sanction in terms of Section 32 of the Procurement Regulations being preferred against you.”

Nyanhete also wrote to Intratrek Zimbabwe P/L managing director on July 28, 2014, advising them that varying the technical partner for Intratrek Zimbabwe from Greenfield Solar Europa GmbH of Germany to Chint Electrical Ltd of China after the tender award was not consistent with primary conditions of mandated negotiations.

He wrote another letter to Intratrek Zimbabwe managing director and ZTE Corporation Ltd managing director on July 31, 2014, saying ZPC had advised the SPB that negotiations with the two firms had failed.

A procurement expert said the SPB should have opened the tender to other bidders soon after ZPC indicated that it wanted variation of the projects from the initial 100MW to 300MW.

“What has happened is that while the SPB may claim to be justified in making this decision, it should have never got to this situation because the tender should have been opened the moment ZPC said they wanted 300MW instead of 100MW,” said the expert.

“This has obviously resulted in almost a year being lost on something that should have been done properly from the word go.

“What is left now is for the SPB to open the tender to other people with a varied requirement of 300MW than the initial 100MW. They cannot award it to any of the three firms without opening it to public tender.”

Energy and Power Development Minister Dzikamai Mavhaire has been pinning hope on solar projects as quick solutions to the power deficit in Zimbabwe.

Zimbabwe’s power plants produce about 1,300MW against a peak demand of more than 2,400MW.

South Africa: SCOPA must investigate Hitachi’s govt contracts


PoliticsWeb

Natasha Michael
March 3, 2014
DA MP says Chancellor House’s sale of its shares in company has made this a matter of urgency. Parliament must intervene in Hitachi debacle.

The DA will be writing to the chairperson of the Standing Committee on Public Accounts (SCOPA) requesting him to urgently lead an investigation into all Hitachi Power Africa and government contracts and deals in the last five years.

The recent revelation that Chancellor House – the ANC’s business wing which partially owns Hitachi – has opted to sell its shares in Hitachi Power Africa for an “undisclosed amount”, has made this a matter of urgency and is very questionable.

This is because Hitachi is the company that was not only awarded the contracts of R38 billion to install boilers at the Medupi and Kusile power stations. But those projects have been delayed because of many mistakes and bungles by contractors, including Hitachi itself. Medupi is not yet even close to being complete, and Kusile has only just begun.

In the wake of the delays at Medupi, the DA made efforts to establish the cause for the delays. All efforts to obtain such information however have subsequently been shut down at every turn.

For years the DA has been saying that there is a clear conflict of interest and corruption for President Jacob Zuma’s ANC to be making money off government contracts. That is corruption, plain and simple.

It is simply unacceptable that the ANC is allowed to dubiously award itself a R38 billion contract, make a mess of the project at Medupi – putting South Africa’s energy supply at risk – and then deciding to cash in whenever it pleases, all at the cost of millions of people.

If Parliament is determined to represent its people and ensure transparency in public contracts, Chairperson Godi must urgently call on Minister Gigaba to bring all contracts between Hitachi and the government in the last five years before the committee. SCOPA must ensure this happens without delay.

I will, alongside the DA representative on SCOPA, Dion George ensure that Chairperson Godi does not ignore our calls for Hitachi to be brought to account without fail.

This is not a good story for the people of South Africa, and the truth must be made known.

Statement issued by Natasha Michael MP, DA Shadow Minister of Public Enterprises, March 3 2014

Nigeria: TCN Contract Cancellation, Yet Another Setback?


AllAfrica.com

BY YUNUS ABDULHAMID

November 15, 2012

The hiring of Canadian firm, Manitoba Hydro, to manage the Transmission Company of Nigeria (TCN) took the Bureau of Public Enterprises (BPE) five years and enormous resources to conclude. It was seen by industry watchers as a major step forward for the power reform process. The cancellation of the contract by President Goodluck Jonathan could well be a major blow to the reforms.

Managing Director of Manitoba Hydro International in Nigeria Mr. Don Priestman yesterday expressed shock over the reported cancellation of its management contract to run the Transmission Company of Nigeria (TCN) for a period of three years.

He said his company was yet to get any official correspondence terminating the contract has been but they only learnt of the development on the pages of newspapers.

In a telephone interview, Mr. Priestman said: “I haven’t really received any formal notification yet. All I know is from the newspapers. So, we are also surprised and disappointed. We don’t understand the reason behind it but we are just waiting to receive a formal notification. I was hoping that sense would prevail and that it was just a question of time. We were willing to give time for the right decision to be made so we could get out of it.”

TCN is one of the successor companies created from the unbundling of the Power Holding Company of Nigeria (PHCN). It combines the functions of a transmission services provider, a system operator and a market operator, all of which are central to the sustainability and development of the electricity sector.

Priestman said his next step was to, “wait for instruction from my head office.”

Nigeria is Africa’s most populous nation of more than 160 million and holds the world’s ninth-largest gas reserves but is blighted by power cuts which last several hours a day, forcing businesses and individuals who can afford them to rely on diesel generators.

The Federal Government is in the middle of privatizing the bulk of its power plants and distributing networks, in a reform process supposed to give foreign investors the confidence to provide the estimated $10 billion-a-year the electricity sector needs.

It all started with the ‘forced’ exit of Prof Barth Nnaji as power minister in August who investors and development partners said inspired confidence to invest.

Recently, the announcement of companies linked with controversial political money bags as preferred bidders for the unbundled units of the PHCN attracted hue and cry from stakeholders who expressed fear that they were being sold to government cronies.

An indication that all was not well with the TCN contract came to light on November 2, 2012 when Don Priestman spoke with newsmen at the West Africa Power Pool (WAPP) conference in Abuja, where he had raised alarm that two months after the contract was billed to commence, his firm was still waiting to get the ‘delegated authority’ from the federal government to start work as provided by the contract’s terms.

Priestman had said: “The first month, August, was a transition month and according to the contract, starting the 1st of September, the schedule of delegated authority should have been issued, which would have given us full authority for running TCN. That has not happened. It’s unfortunate. I think you will have to ask the authority why not.

“We are ready and keen to proceed, we have the people here, we know what to do, we have done something similar in other countries with success. So we hope there won’t be much more delay before we can start doing what we came here to do. It’s difficult to do a job when you are not in charge. Right now we are working closely and we are observing, we are making suggestions but we are not in control.”

At the same event, however, the Permanent Secretary in the Ministry of Power, Mrs. Dere Awosika, who represented the Minister of Power, contradicted Priestman’s position.

She told newsmen when asked to clarify Priestman’s position: “Why do you think they are in this meeting? They are already working.”

When further asked if Manitoba was being incorrect and whether the schedule of authority was already in place, she said: “Am not saying so. You want us to just throw out the issue without smoothening ends.”

News, however, broke out on Tuesday night that President Goodluck Jonathan had cancelled the transaction. Reuters quoted Presidential spokesman Rueben Abati as confirming the cancellation of the transaction by President Goodluck Jonathan with immediate effect.

He was quoted as saying the power ministry would issue a statement as to why the deal was cancelled but till press time last night, the ministry had not.

The ministry’s spokesman, Mr Greyne Anosike, told Daily Trust on phone that a statement would be issued after full briefing.

The BPE kept tight lips last night when asked to comment. Its spokesman, Chukuma Nwokoh, said ‘no comment’ when asked the bureau’s reaction to the cancellation of the contract which took it five years to complete.

In September, when Manitoba was to resume as management contractors at the TCN head office in Abuja, PHCN workers stoutly resisted the move. They alleged their jobs were at risk given that the Federal Government had not finalized retirement and disengagement terms with them.

However, then minister of power, Prof Barth Nnaji, said Manitoba would bring only eight staff while existing indigenous staff would be in the shadow as deputies.

He said: “They (Manitoba) are not going to get rid of TCN workers but they will bring in a few people to work with the TCN people and more importantly, they will bring their expertise. They will bring in speed; be able to anticipate issues and problems and address them proactively. This is what we don’t have in the public service.”

The road to the appointment of Manitoba Hydro International of Canada has been long and tortuous. The process started five years ago by the Bureau of Public Enterprises (BPE) during the administration of President Olusegun Obasanjo in 2007.

Manitoba Hydro International won the bid to manage the TCN through a bidding process and consequently signed the $23.7 million management contract with the bureau last July. The Power Grid of India lost out in the bidding contest.

The process was stalled during the administration of late President Umaru Yar’Adua, who rolled back the power sector reform and privatisation programme.

However, when Jonathan took over in 2010 and launched the Power Sector Road Map that same year, the Federal Government directed the BPE to continue with the process from where it had been stopped, rather than re-advertising for prospective companies to express interest all over.

Reports suggested that the president’s decision to cancel the contract was based on a memo sent by the Bureau of Public Procurement (BPP), which for several weeks, had been pushing for its cancellation on the premise that it did not pass through due process as provided under the Public Procurement Act.

Director General of the BPP Emeka Eze was said to have kicked against the appointment of Manitoba because a few material irregularities had been noticed in the process that led to the company’s selection.

Eze was said to have informed the president through the memo that a management contract was distinct from a privatisation transaction or concession, and since the procurement of all Federal Government contracts, including those covering professional services are covered by the Public Procurement Act, the BPE should not have superintended the selection process.

Eze was also said to have insisted that if the BPP had overseen the procurement of the contractor, it is the Federal Executive Council (FEC) that should have approved the selection of Manitoba based on the bureau’s recommendation.

The president has reportedly directed the Ministry of Power to handle the selection of a new contractor for TCN within 30 days.

 

Standard Bank Group is leading investor in South Africa procurement process


PV-TECH.ORG

By Nilima Choudhury

November 13, 2012

South Africa’s Standard Bank Group has emerged as the leading investor in the first round of the country’s renewable energy independent power producer (REIPP) procurement process, backing a total of 11 solar and wind projects.

The South African government has allocated 1,416MW for this first round of the procurement process, worth about R47 billion (US$5.3 billion) of fixed investment, of which the majority, around R27 billion (US$3.1 billion), will be funded by debt.

Standard Bank Group will provide comprehensive corporate and investment banking services to all its clients in the REIPPP programme, including underwriting R9.4 billion (over US$1 billion) worth of debt, providing interest and currency hedges, carbon trading credits and corporate bonding and guarantee facilities.

The bank’s clients include 338MW of wind and 235MW of solar PV, out of the combined 1,416MW per year expected to be produced by all the projects. Standard Bank Group itself has also taken an equity stake in four projects.

Alastair Campbell, Executive Vice President, Power & Infrastructure Finance at Standard Bank Group said: “Standard Bank will be ready to disburse funding for most of the projects as soon as all documentation is finalised and hedges are closed.”

Developers will have until 16 November 2012 to finalise all their documents and foreign currency hedges, after which projects can be rolled out.

“This confirms that there is considerable appetite from developers and banks to invest in renewable energy projects in South Africa. Standard Bank has been involved in the emerging story of power generation from inception. We participated in the Integrated Resource Planning public hearings which re-affirmed REIPP procurement process as an accepted way of diversifying our energy mix and reducing carbon emissions,” continued Campbell.

Further bidding rounds are expected to take place roughly six months apart from 2013 onwards to allocate the total 3725MW. In line with the country’s long-term power plan, South Africa aims to secure a total of 17,800MW of renewable energy or 42% of South Africa’s new generation capacity by 2030.

Standard Bank Group said it is already preparing for the financial close of the second bidding window and is supporting the third bidding window. The second bidding window is expected to close in the first quarter of 2013.

“We have already committed a total of R6.1 billion of debt out of a total R19 billion to preferred bidders on the second bidding window. The second programme is smaller than the first and will have a total of 19 projects. Standard Bank is supporting preferred bidders on five of these projects,” said Ntlai Mosiah, Head of Power and Infrastructure SA Advisory and Coverage at Standard Bank Group.

“As the programme unfolds, an increasing number of benefits are expected for the South African electricity consumer. Chief amongst these is the expected fall in tariffs bid due to increasing interest and competition in the process. We are expecting that renewable energy prices will reach grid parity in the foreseeable future.”

Mosiah continued: “An aligned major benefit will emerge from increased local component manufacturing with its associated industrial development and job creation, an aspect that government has insisted should be accelerated.”

Gauteng Civil Society Marches for Nuclear – Free South Africa


AllAfrica.com

November 12, 2012

PRESS RELEASE

Thousands of people from civil society groups across Gauteng today took part in a march to protest against South Africa’s nuclear expansion plans. The activists marched from Pieter Roos Park to Beyers Naude Square, where they handed over a memorandum to the Presidency. Smaller protests and placard demonstrations happened simultaneously in Durban, Cape Town and Bantamsklip.

Members of Earthlife Africa, Greenpeace Africa, Justice and Peace, and Ceasefire formed the alliance with the purpose to raise concerns about the cost of the new build project, the safety of nuclear power and the lack of transparency and accountability in the nuclear sector.

According to Earthlife Africa’s Makoma Lekalakala “The country’s new nuclear build is estimated to be at least R1 trillion in public funds. The cost for the nuclear infrastructure build will ultimately be passed down to South Africans which means we are heading for devastating poverty amongst millions of already impoverished South Africans”

Since Fukushima, several countries around the world have moved away from nuclear energy. While the world sees nuclear as dangerous and unsafe, the South African government approved a nuclear expansion plan barely a month after the Fukushima disaster and has remained adamant that this is the best option for the country.

“Government has refused to listen to the people. They can ignore a few but they cannot ignore thousands. It is irresponsible for the South African government to want to expose their people to the threats of nuclear contamination as we recently witnessed in Fukushima” said Greenpeace Africa’s climate and energy campaigner Ferrial Adam.

There has been little public information on the procurement and tender processes. The Department of Energy is set to make the largest state expenditure in South Africa’s history. At the moment, the Department’s procurement of energy, especially with the procurement of renewable energy in the REBID process, has been opaque at best.

Civil Society will be watching the nuclear energy procurement process very closely. The nuclear industry has often functioned under a veil of secrecy. We have the right to know and we will demand that the procurement processes are open and transparent. The era of secret deals like the arms deal must come to an end” added Adam.

“Ultimately we want the government to heed our call for just energy solutions. Nuclear energy is not the answer,” concluded Lekalakala.

Kentz Nabs $45m EPC Solar Power Project In South Africa


Ventures-Africa.com

November 12, 2012

VENTURES AFRICA – Global engineering solutions provider, Kentz Corporation Limited, has been awarded a $45 million Engineering, Procurement and Construction (EPC) contract for the 75MWp Kalkbult Solar Photovoltaic (PV) Project in the Northern Cape area of South Africa.

Scheduled to be completed by January 2014, the EPC project is a key component of Phase 1 of the South African Department of Energy’s 3,725MW Renewable Energy IPP Procurement Program.

“We continue to develop our EPC capabilities in the African region and this prestigious project for Scatec Solar demonstrates our ability to secure a wide range of EPC contracts,” Chief Executive of Kentz Group, Christian Brown said.

The award of such a key project for South African renewable energy will position us to contribute to the development of further renewable energy projects across the continent and beyond,” he added.

With over 14,000 employees in 29 countries  of some of the most remote locations on earth, Kentz serves a blue chip client base primarily in the oil, gas, petrochemical, and mining and metals sectors. The company generated revenues of $1.37 billion and profit before tax of $79.4 million in the year ending December 2011.

S.Africa okays $5.4 bln in clean energy projects


Reuters Africa

October 29, 2012

JOHANNESBURG (Reuters) – South Africa has given the green light to an initial $5.4 billion worth of clean energy projects that will allow it to procure 1,400 MW of electricity and help reduce reliance on coal-fired plants, the energy minister said on Monday.

The government has selected 28 wind and solar projects in the first stage of the programme, with the contracts expected to be signed on November 5, Energy Minister Dipuo Peters said.

“These bidders will be investing about 47 billion rand in power generation and will create a number of jobs during construction and operation of these power plants,” Peters said in a statement. The plants are due to be operational between 2014 and 2016.

Africa‘s largest economy depends on coal for 85 percent of its electricity supply of around 41,000 MW. Last year it launched a process to procure cleaner energy to reduce carbon emissions and bolster electricity supply.

A key producer of platinum, gold, iron ore and coal, South Africa has been struggling to meet fast-rising demand for power.

The process of adding more renewable power to the grid has dragged on for years and raised doubts about the government’s ability to deliver on its plans.

It has also chosen another 19 renewable energy projects worth 1,043.9 MW in the second stage of the programme, which it hopes to finalise by late March next year. A third bidding round will close on May 7.

South Africa wants to use the green energy drive to boost job creation through manufacturing and requiring energy companies to source materials locally.

While the original procurement plan was to eventually add up to 3,725 MW of green energy to the national grid by 2016, the programme has recently been expanded to source an additional 3,200 MW of renewable power by 2020.

Apart from green energy, South Africa plans to procure more than 9,000 MW of new electricity produced from coal, gas, regional hydro and co-generation at industrial plants by 2025. Other plans include a tender for 9,600 MW worth of nuclear power.

© Thomson Reuters 2012 All rights reserved

S Africa: renewables interest dampened by legal hurdles


Beyondrics, Financial Times

By by Ruona Agbroko

July 26, 2012

South Africa’s latest round of renewable energy contracts has attracted interest from European developers after home subsidies have dried up, but legal uncertainty and rules over local ownership may cut the temper their enthusiasm.

So far the third round of bids for solar and wind projects has seen some developers stop short of a full committment, which is hardly helped by government holdups.

The deadline for bids to supply another chunk of the 3,725MW of renewable energy that South Africa wants to cut its reliance on coal is October 1. From previous rounds, foreign direct investment in renewables is at $12bn in the year to May. There are two further bid rounds slated for April 2013 and July 2014.

DLA Piper Australia and its South African partner DLA Cliffe Dekker Hofmeyr have advised more than 50 per cent of the successful bidders in the first two rounds of contracts and are working with companies in their current bids. “The majority of the developers are European based, particularly Italian and Spanish, and there is an increase in interest from German, French, Chinese and US-based developers,” Damian McNair, head of finance and projects for Asia Pacific at DLA Piper told beyondbrics… Read more.

Jonathan, Etete, Shell in fresh N155billion scandal


Premium Times

By Idris Akinbajo

May 21st, 2012

Four years after he was convicted of money laundering in France, Dan Etete, a former Petroleum Minister, through his company Malabu Oil, has become a billion dollars richer, courtesy of the Nigerian Government and Shell.

According to documents (filed March 22, 2012) before the Supreme Court of the State of New York in the US, President Goodluck Jonathan discreetly approved the transfer of the sum of $1.1bn to Mr. Etete on April 29, 2011, two weeks after he was re-elected.

The money was first paid to the Federal Government by two multinational oil companies: Nigeria Agip Exploration Limited (Agip) and Shell Nigeria Exploration and Production Company Limited (Shell) in respect of oil block OPL 245.

But shortly after the funds were credited to the Federal Government’s account, Mr. Jonathan ordered that it should be secretly transferred to a London account of Mr. Etete’s company, Malabu Oil.

It is not clear what deal Mr. Jonathan struck with Malabu, and on what basis the payment was made. President Jonathan’s spokesperson, Reuben Abati did not answer or return calls seeking his comment for this story. He also did not respond to a text message sent to him for the same purpose.

The government made the payment to Mr. Etete’s company even when it had repeatedly insisted that the award of the oil block to Malabu was done in violation of laid down procedures.

Shell insisted it had no knowledge that the government passed the funds to Mr. Etete’s company.

OPL 245: History

While serving as Petroleum Minister under late Head of State, Sani Abacha, Mr. Etete awarded his own company, Malabu, an oil block, OPL 245 in 1998.

The allocation was however reversed by the Federal Government under President Olusegun Obasanjo in 2001 when the FG described the allocation process as dubious. The block was allocated to Shell in 2002.

Following the revocation, a prolonged legal battle ensued with Malabu taking the Federal Government to court. In 2006, the Federal Government reversed itself and re-allocated the oil block to Malabu. This angered Shell which then filed arbitration proceedings in Washington.

Following the protracted legal battles, an agreement was reached between all parties.

The agreement

In an agreement titled “Block 245, Malabu resolution agreement” dated April 29, 2011 between Malabu and the Federal Government, the FG agreed to pay Malabu $1,092,040,000 in “full and final settlement of all its claims, interests or rights relating to OPL245.” The agreement also stated that the rights to the oil block would be reallocated to Agip and Shell.

In a separate agreement between Shell and Nigeria, titled “Block 245 resolution agreement,” the two multinationals (Agip and Shell) agreed to Pay the same sum “for the purposes of FGN settling all and any existing claims and/or issues over Block 245…”

In other words, the multinational oil firms agreed to pay $1.1bn to the FGN with the knowledge that the money would be used to settle any existing claims that existed by any other party to the oil block…Read more.

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