The government of Zimbabwe has scuttled two multi-million dollar coal mining and electricity generating projects planned by a consortium of local business men in partnership with an Indian company and has awarded the project to one of Zanu-PF’s major financiers, casting grave doubts on its indigenisation thrust.
Under the proposals, Fumana Energy Private Limited led by Bulawayo businessman Delma Lupepe, would have partnered an investor from India to inject capital into the power station upgrade in partnership with a consortium comprising of the local community, traditional chiefs, workers, the Matabeleland Development Association and individual business people.
The two projects, estimated to cost US$600 million and US$400 million respectively, would have broken the monopolies of local coal miner Hwange Colliery Company and power generator, Zimbabwe Power Corporation (ZPC).
According to the Fumana proposal, both Hwange and ZPC lack the capacity to raise funds needed to invest in upgrading power and coal supplies for increased generation and initiating other downstream industries from coal by-products
Fumana’s proposal would have seen the opening up of the coalfield in Hwange district and coal-bed methane in the Lupane Halfway area of Sinamatella where geological surveys have indicated 96 million tons of coal deposits.
Last week, the Zimbabwe Electricity Supply Authority (ZESA) chief executive officer, Engineer Benjamin Rafemoyo announced the power utility had entered into a US$800 million deal with John Bredenkamp a known Zanu-PF financier on an identical project which Fumana had earlier proposed.
South African-born Bredenkamp - ranked among Britain’s richest people in 2002, with an estimated fortune of US$ 1 billion - had his companies investigated for tax and exchange control violations and he reportedly fled Zimbabwe in 2006.
About a dozen and half of his companies were placed under a revised sanctions list published by the European Union in January this year.
Bredenkamp temporarily fell foul of President Robert Mugabe in his attempts as king-maker in 2004. He allegedly tried to convince Mugabe to retire and make way for his business partner and long-time presidential hopeful, Emmerson Mnangagwa, a strategy that underestimated the intensity of the succession race and resulted in a fierce Zanu-PF backlash.
Sources close to the consortium of indigenous businesspeople say Fumana had applied for a concession which falls under the Ministry of Lands and Land resettlement, but Minister Didymus Mutasa had given preference to a belated application by Bredenkamp because of his Zanu-PF connections.
The Western Area Coalfields was allocated to ZPC, but the stipulated period to develop the coalfields elapsed before the power utility undertook any tangible work on the concession. It is highly unlikely that ZPC would make any meaningful development of a mine in five to seven years.
Hwange Colliery Company (HCC), which is also vying for the same coalfield, has neither the production capacity nor the financial resources to develop a mine in the short term.
The project envisages providing thermal coal to Hwange Power Station Stage 3 which Hwange Colliery Company is not likely to be able to support under its current performance that has resulted in coal shortages for industrial and agricultural as well as for domestic use. Fumana Energy also envisages mining coke for internal markets such as the Zimbabwe Iron and Steel Company (ZISCO), Zimbabwe Alloys and Zimasco as well as for export while providing general purpose coal to support agricultural and domestic needs.
According to the project blueprint, mining coal-bed methane which has an assortment of other applications such as petrochemicals and fertilizers would buttress foreign currency generation through exports.
Fumana CEO, Lupepe, in June last year said in a letter to President Mugabe the project would bring economic development to the Matabeleland region, increase foreign currency inflows through the export of coking coal and increase employment.
“We think that this is a unique opportunity for Zimbabwe to demonstrate its ability to address the current challenges being faced, through a joint venture partnership that empowers the people of Zimbabwe, retains national ownership while increasing the country’s electricity generation capacity” the letter says in part.
Fumana requested government support in the form of a Letter of Support for submission to the Mining Commission; authority to negotiate with ZPC which holds mining concessions through two special grants for the proposed site of the venture and a government Pledge of Security to boost investor confidence.
Source: Zimbabwe Times
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