Power play: How Zimbabwe binned an American energy firm because it was owned by ex-US Secretary of State
The Zimbabwe government in 2015 rejected the winner of a tender to install a 200MW diesel power plant because the company is part-owned by Madeline Albright, the former US Secretary of State, and authorities saw this as a threat to national security.
APR Energy, based in Florida, was the winning bidder in a tender to supply emergency diesel electricity, at a time the country was in a power crisis. But authorities rejected APR and then broke tender rules to handpick Kuda Tagwirei’s Sakunda instead, according to a 2019 PriceWaterhouseCoopers (PwC) audit report into power utility ZESA. The report is currently under scrutiny at Parliament’s Public Accounts Committee.
The auditors say the Office of the President and Cabinet (OPC) on November 26, 2015, ordered the Ministry of Energy to conduct due diligence on Sakunda’s submission for the project. This is despite Sakunda not having participated in the tender, in which APR competed with two other firms, Glasgow-based Aggreko and Altaaqa of the UAE.
Auditors interviewed Patson Mbiriri, then Permanent Secretary in the Ministry of Energy, on why government dumped APR.
“He stated that the concerns were arising from the fact that APR was an American company and specifically because the company was owned by Ms. Madeleine Albright,” the audit report says. “Mr Mbiriri stated that the concern was that APR, considering its shareholding, on a national project would have posed a serious security threat to Zimbabwe.”
In 2015, Albright’s investment fund, Albright Capital Management, and Quantum Strategic Partners, a hedge fund tied to billionaire George Soros, bought a controlling stake in APR for US$250 million. The transaction happened around the same time that APR had placed its bid for the diesel power plant in Zimbabwe.
The ruling ZANU-PF government has also routinely accused Soros of funding its opponents.
US-Zimbabwe: no love lost
APR’s treatment has been a sore point in already strained relations between Zimbabwe and America.
“American firm won tender and was ready to provide top-quality construction of Dema Power Plant in 2016, but the contract was taken away and given to Sakunda, who never bid on the tender,” the US embassy tweeted in 2019.
The US last year imposed sanctions on Tagwirei and Sakunda, citing his alleged role in government corruption.
APR supplies small-scale power plants that can be installed quickly to work around short-term power supply problems. It has a presence in Botswana, Angola and other African counties, a factor that had worked in its favour during adjudication.
Says the audit report: “According to (ZESA Projects Manager) Ms. (Flora) Chikonye, the three companies were selected by a Committee made up of ZESA Holdings, ZETDC and ZPC staff. Ms Chikonye stated that the Committee based its selection on the fact that these companies were reputable and had a good track record in Africa.”
But, the auditors found, this was not enough to convince government, which ordered the project to be given to Sakunda instead. The OPC, the audit said, also cited indigenisation laws for its preference for Sakunda. This was despite the fact that APR also had a local partner, Zuva Petroleum.
The auditors pointed out: “The due diligence report stated that the directive by the OPC to perform due diligence on Sakunda’s submission was in line with Government’s policy on indigenisation per the ZimAsset programme. We noted however that the structure of the Sakunda-Aggreko partnership was similar to APR’s partnership with Zuva Petroleum. Both partnerships involved a local fuel supplier and a foreign plant provider. It therefore brings to question why indigenisation would have been used as a criteria to appoint Sakunda instead of APR.”
The auditors showed a comparison of Sakunda’s submission and APR’s offer.
Press reports in 2015 said Tagwirei had partnered former President Robert Mugabe’s in-law, Derrek Chikore, in the Dema project.
After Sakunda bagged the project, it went on to appoint Aggreko, a losing bidder, as a partner. Up to that point, Aggreko had previously made several failed bids to set up diesel power plants in Zimbabwe.
In November 2015, Tagwirei wrote a letter, accompanying Sakunda’s submission for the project, stating that he was partnering Aggreko.
“As the setting up of diesel generator plants is a highly technical area, it is questionable why Sakunda having presented its tender as the main bidder were awarded the contract,” the auditors said.
NewZwire