PricewaterhouseCoopers (PwC), on Wednesday last week commenced its forensic audit initiatives on the debt-ridden Zimbabwe Electricity Power Supply Holdings (Zesa), amid reports all Zesa Holdings and its subsidiary, Zimbabwe Electricity Transmission and Distribution Company (ZETDC) top officials face the chop to pave way for audit.
The forensic audit comes at a time when some top Zesa officials are facing immenent arrests by the Zimbabwe Anti-Corruption Commission (Zacc).
Internal Zesa sources told the Zimbabwenewslive that by Friday last week several top officials were on the wanted least by Zacc.
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“Last week Zacc compiled its least of suspects who are being under graft probe and may be arrested anytime soon,” the source said.
The forensic audit also comes hot on the backdrop of efforts to arrest controversial businessman Wicknell Chivhayo over the Gwanda Solar project scandal where he was given US$5 million without a bank guarantee by Zesa.
As reported Zimbabwenewslive a few days ago, Chivhayo was reported to the Serious Fraud Squad as well as to Zacc.
Early this year government ordered a forensic audit into managerial, financial and labour matters at the power company including the controversial energy tenders which were inflated by over US$500 million.
Energy minister Simon Khaya Moyo confirmed the audit to the Zimbabwe Independent, saying it will be comprehensive, as it will probe “all aspects” of the parastatal and involve all subsidiaries.
The forensic audit, Moyo said, would comb through the parastatal’s administrative, labour and financial records, after which “corrective” action would be taken.
“I can confirm the audit but I cannot say much at the moment. I think by now the Auditor-General (AG) has identified the company which will carry out the forensic audit,” Moyo said.
Zesa is rocked by massive tender scandals, in which government has entrusted the country’s critical multi-billion-dollar energy projects to dodgy businesspeople who have criminal records, ranging from fraud to drug trafficking. Zimbabwe is planning to construct three solar plants, each generating 100 megawatts.
The initial cost, as of 2014, was US$183 million for each of the projects, bringing the total cost to US$549 million.
The solar tenders were won by China Jiangxi Corporation (CJC), ZTE Corporation and Intratrek Zimbabwe (Pvt) Ltd owned by Harare businessman Wicknell Chivayo.
Soon after winning the tenders, the companies demanded price escalations, resulting in the projects being pegged at US$240 million each, bringing the total costs to US$720 million. This meant a variation of US$171 million from the initial costs.
Government officials told the Independent in 2016 the country initially planned to have one 100-megawatt project, which was won by CJC but, for unexplained reasons, Intratrek and ZTE, which had lost in the initial bids, were also awarded tenders.
Zimbabwe is also working on the Kariba South Power Expansion project and the Gairezi Hydro Project. Former Energy minister Elton Mangoma, who negotiated the deals a few years ago, revealed the projects’ costs were also heavily inflated.
The Gairezi Project was awarded to a consortium led by Chivayo’s Intratek. Mangoma said the Gairezi project cost had shot up to US$248 million, up from the initial US$90 million. This created a variance of US$158 million.
The Kariba South Power Extension project, which was officially commissioned by former president Robert Mugabe in September 2014, was initially pegged at US$355 million, but shot up to US$533 million. The cost escalation was US$178 million.
The inflated costs totalled US$507 million.
The prices were escalated despite some experts in ZPC arguing it would make better economic sense to fund reputable alternatives, including the Hwange Thermal project which required US$400 million to produce an additional 300MW. The solar projects, at current cost, require US$720 million to generate 300MW, meaning ZPC could have saved US$320 million.
Chivayo’s company, Intratek was later awarded the US$200 million tender by the ZPC for the Gwanda Solar Power Project.
Chivayo, who was paid US$5 million upfront in murky circumstances and without a bank guarantee before commencement of the project, has not done any meaningful work on the project despite being paid in advance.
Apart from being engulfed in tender scandals surrounding the controversial energy deals, Zesa is also hamstrung by a giant debt overhang estimated at US$1 billion in arrears owed to international and domestic suppliers.