China’s CMEC scrambles to save power deal in Zimbabwe


Zimbabwe President Robert Mugabe

28 November 2013, Harare – The Zimbabwe government has given China Machinery Engineering Corporation (CMEC), the successful bidder for the expansion of Hwange Thermal Power Station, until the end of December to come up with a funding plan for the project, it has been learnt.The Chinese company, which was awarded the tender in April this year, was said to have been on collision course with government after failing to provide a funding plan for the Hwange project, a move which has forced government to contemplate cancelling the tender.

The Financial Gazette’s Companies & Markets (C&M) understands that CMEC officials were this month in the country for talks with government.

Government sources indicated that the Minister of Energy and Power Development, Dzikamai Mavhaire, was not happy with CMEC’s delay in coming up with a funding plan for the project.

“The Hwange plant extension tender had its own problems which I am sure you are aware of but the Minister (Mavhaire) is not happy with the Chinese company, particularly on the delay in coming up with a funding plan,” said a source.

“There have been some discussions going on within the ministry where some questions were raised about the company’s capacity to carry out the project and the Minister (Mavhaire) was contemplating cancelling the tender. However, word (of a possible cancellation) got to CMEC and they immediately jetted into the country (two weeks ago) to convince the Minister that they will be able to do the project. But up to now, they haven’t come up with a plan on how they will fund the project, something which worries the Minister,” added the source.

Hwange Power Station is currently using six units and the expansion would see the plant adding two more units, which would add a combined generation capacity of 600 megawatts (MW).

Mavhaire confirmed when ccontacted for comment that CMEC officials were indeed in the country for negotiations with the Ministry, saying he now expects to have the funding plan from the Chinese company before the end of the year.

“We are still negotiating with the Chinese company whose officials were in the country this month and we expect to agree on the contract soon,” Mavhaire told C&M.

“However, the only problem is that they are still to come up with a funding plan, something which worries us very much because this forms the basis of our contract. However, we have told them that it is important for them to do so before the end of the year,” he said.

– Financial Gazette

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