Govt Stalls Beitbridge-Harare Road Project

Financial Gazette (Harare)

Dumisani Ndlela

3 June 2011

ZIMBABWE’S Ministry of Transport, Communication and Infrastructure Development (MTCID) has stalled the dualisation and tolling of the Harare-Beitbridge road, the country’s highway to South Africa as well as the southern neighbour’s transit artery to at least five regional countries.

Information obtained by The Financial Gazette suggests that there have been surreptitious manoeuvres by the MTCID officials to undermine ZimHighways Consor-tium (Pvt) Limited, a company awarded the tender to dualise and toll the Beitbridge-Harare road, arguably southern Africa’s busiest transit road.

The government has balked from signing the concession agreement to enable financiers to release funding for the project two years since ZimHighways Consortium forwarded it to government for its signature. This has triggered speculation that there could be personalities within the MTCID who are not happy with the consortium, a move that has reportedly undermined trust between ZimHighways and government in their engagement over the project.

In fact, the consortium is now seeking assistance from the State Procurement Board, which succeeded the Government Tender Board that awarded ZimHighways the tender in 2005, to arbitrate between the consortium and the MTCID.

ZimHighways consists of the country’s major construction companies – Costain Zimbabwe, recently rebranded CZL following the group’s takeover by a management consortium, Murray & Roberts, Joina Development, Kuchi Construction, Civil Planning Projects (Zimbabwe), Southland Project Management and bankers, BancA BC.

ZimHighways won the bid for the design, engineering, financing, procurement, construction, operation, tolling and maintenance of the Harare-Beitbridge road system on a build, operate and transfer (BOT) after a tender issued in early 2002.

This was after the government had indicated that it was satisfied with the technical ability of the company to undertake the project. The ZimHighways contract, PBR 0632 was awarded on June 7, 2005.

Due to the economic crisis obtaining in the country, government had allowed the consortium to postpone the project until such time that the economic situation allowed for a viable implementation of the project.

On August 28, 2009, the MTCID then wrote a refreshed letter of comfort, a copy of which was seen by The Financial Gazette, indicating that ZimHighways had renewed its interest in the project and that government was committed “to finalising the Concession Agreement with the ZimHighways Consortium and subsequent implementation of the Harare to Beitbridge toll road project in the shortest possible time”.

The letter was signed by MTCID permanent secretary, Pattison Mbiriri, who was said to be out of the country when The Financial Gazette contacted his office for a comment.

The acting permanent secretary a Mr L. Muzondo had not answered questions sent to his e-mail on Friday last week.

ZimHighways then obtained a written undertaking from the Development Bank of Southern Africa (DBSA) to finance and or arrange the necessary funding for the project.

Subsequent to this development, in July 2009, DBSA wrote another letter advising that they were willing to extend funding to also cover the project preparation stage that was going beyond the project investment funding.

This culminated in several meetings between the consortium, DBSA and the government represented by the Infrastructural Development Bank of Zimbabwe, the new advisors to the MTCID. These meetings culminated in the submission of an application for project preparatory funding by the consortium. DBSA then sent a full mandate agreement, indicating their readiness to unveil the requisite funding, for signing and accent by ZimHighways. The copies of the mandate letter were copied to the MTCID as required by the concession document.

But government then dramatically leaned over DBSA and pushed them to sign with the MTCID and relegate ZimHighways Consortium.

Sources in both government and the consortium indicate that this marked “the stalling process” for the project.

“The letter to DBSA spoke of other players that government wanted to take over the project,” a source within the ZimHighways Consortium said.

Following this development, the MTCID then wrote to ZimHighways Consortium saying it had secured sovereign debt and therefore there was no longer any need for a concession agreement on the basis of the Public, Private sector Partnership (PPP)/BOT arrangements. The ministry indicated that it would revert to a traditional contract, in which ZimHighways could, at the benevolence of the MTCID, be subcontracted for some of the dualisation and tolling work.

However, this turned out to be false as the mandate letter the MTCID had proceeded to sign with the DBSA was predicated upon the PPP/BOT concession agreement.

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