Power rift scuttles US$2bn road deal

VICE PRESIDENT Constantino Chiwenga allegedly pushed for the unilateral termination of a US$2 billion tender awarded to South African firm Khato Holdings for the dualisation of the Beitbridge-Victoria Falls highway when President Emmerson Mnangagwa was away on annual leave, the Zimbabwe Independent can reveal.

Chiwenga, who according to his estranged wife Marry Mubaiwa harbours presidential ambitions, was the Acting President when Mnangagwa was away on leave at his Precabe Farm in Kwekwe.

As widely reported in this publication around the widening rift between Mnangagwa and Chiwenga threatening to divide Zanu PF and government, the latest manoeuvres by Mnangagwa’s deputy cast light on the long-running rift.

However, some government officials say the cancellation of the deal last week was done in consultation with Mnangagwa.

e South African construction giant which sealed the road construction deal at time when Mnangagwa was on a crusade of inviting foreign investors was left licking its wounds after Chiwenga delivered the hammer blow, according to sources. Mnangagwa resumed duty on February 5. e multi-billion-dollar project was expected to boost regional trade as it connects four countries — Zimbabwe, Zambia, Democratic Republic of Congo and Botswana.

e project was also expected to culminate in the construction of additional infrastructure.

Prior to the cancellation of the lucrative tender by Chiwenga, Katho Holdings through its subsidiaries, Khato Civils and South Zambezi had won tender rights for the development of the road on a Built, Operate and Transfer (BOT) basis.

A memorandum of agreement between Zimbabwe and the joint venture was subsequently signed in April 2019 after which a letter of appointment followed.

Sources close to the botched deal, which sharply divided the government between bureaucrats coalescing around Mnangagwa and his deputy, told the Independent this week that Chiwenga wielded the axe on the South African firm citing lack of progress on the project.

Khato Holdings had already completed review and bankable feasibility studies before Chiwenga pulled the rug from under its feet.

However, Khato Holdings will not go down without a fight as sources in separate briefings revealed that the entity linked to influential Malawian billionaire Simbi Phiri will seek legal recourse against the government.

Well placed-sources said the South African company had been requested by the Government of Zimbabwe to submit its pre-feasibility study so that the government would comment as per the demands of a BOT contract.

The Independent is informed that instead of getting the comments after submitting the pre-feasibility study, the construction company was instead given a letter informing them of the cancellation of the contract by Transport minister Felix Mhona at the instruction of Chiwenga who was Acting President.

There are also strong indications that the company had already invested millions of rands in undertaking the preliminary stages of the project. The road expansion project faced delays due to the Covid-19 pandemic which saw most construction projects across the region failing to take-off.

“The investor was shocked when a cancellation letter was served at the instigation of Chiwenga who was the Acting President. The investor had submitted a pre-feasibility study only to get a different result from the government. Mnangagwa was not aware of the cancellation only to be informed after everything had been done,” the sources said.

Transport minister Mhona did not respond to questions sent to him on WhatsApp and text. He was also not picking calls while permanent secretary Tedious Chinyanga yesterday declined to comment.

Khato Holdings chairman Phiri referred questions to the government of Zimbabwe.

Mnangagwa in November last year while addressing party supporters in Beitbridge raised concerns about project implementation delays.

This is, however, not the first-time that the government has been subjected to court action by investors for terminating mega projects after awarding tenders.

In 2020, the Diaspora Infrastructure Development Group (DIDG) instructed its lawyers Atherstone and Cook Legal Practitioners to sue the late Transport minister Joel Biggie Matiza and the National Railways of Zimbabwe (NRZ) for US$215 million after cabinet controversially terminated the consortium’s US$400 million bid to recapitalise the rail operator.

As extensively reported by the Independent at the time, the same multi-million dollar deal was scuttled by top government officials who were opposed to DIDG’s bid while they were manoeuvring to position their preferred suitors for the moribund railway operator.

Following Chiwenga’s termination of the Khato Holdings successful bid, the government will soon invite fresh bids for the Beitbridge-Victoria Falls dualisation project.