Sanctions poser for mega fuel project

08 Jul, 2018 - 00:07 0 Views
Sanctions poser for  mega fuel project

The Sunday Mail

The $5,2 billion coal-to-fuel joint venture project between Government and a Canadian investor planned for Lisulu, Hwange, is facing inordinate delays after it emerged that economic sanctions imposed on Zimbabwe have become a major stumbling block.

But the investors are confident that contingency measures will help to circumvent the inconvenient challenge.

While Vectol Zimbabwe — a joint venture between Verify Engineering Private Limited and Nkosikhona Holdings — has received the necessary regulatory approvals, it has become increasingly difficult for the investor to move funds to kickstart the project.

Verify Engineering is an agent of the Ministry of Higher and Tertiary Education, Science and Technology Development, while Nkosikhona is an investment vehicle of Magcor Consortium Group of Companies of Canada.

Having been granted the necessary approvals from the Zimbabwe Revenue Authority (Zimra), the Zimbabwe Investment Authority (ZIA), the National Social Security Authority (NSSA), including opening a local bank account with CBZ Bank, it then emerged that the funds could not be readily transferred for the local mining venture.

The groundbreaking ceremony for the project, which is expected to create over 20 000 jobs in the next three years, was slated for the first few weeks of this month, but has been postponed.

Vectol has since activated contingency measures that involve opening a bank account with an international bank in order to facilitate the transfer of funds.

Higher and Tertiary Education, Science and Technology Development Minister Professor Amon Murwira told The Sunday Mail last week that Government is optimistic that operations will begin soon.

“All the necessary regulatory certifications, including with the Zimbabwe Revenue Authority, the Zimbabwe Investment Authority, the National Social Security Authority and the opening of bank accounts, have been completed.

“We are excited about the way we have gone about all this work quietly and have reached a stage where groundbreaking is just around the corner,” said Professor Murwira.

“So far, in terms of groundbreaking, the situation is still fluid, but we expect to have the ceremony during the first weeks of July.

“We have set up a venture that involves the mining of coal before it is processed.

“We have started the process of procuring equipment for the construction of the processing plant before construction commences.

“As you may be aware, construction of the plant will take three years and during the interim period, we will be mining the required coal for processing once the plant is ready,” he said.

A lot of work, he added, has been invested to make sure that the project comes to fruition. Vectol will beneficiate coal to produce liquid fuels, including petrol and diesel, liquefied petroleum gas, oxygen, waxes, compounds for agriculture such as fertilisers, tar and solvents for plastic manufacturing.

At full capacity, the beneficiation plant is envisaged to produce 8 million litres of liquid fuels daily against a national demand of five million litres.

It will also produce a vast array of industrial chemicals.

Verify Engineering chief executive Engineer Pedzisai Tapfumaneyi told The Sunday Mail last week that despite the delays, the project was primed to take off soon.

“We are now ready for the groundbreaking ceremony,” said Eng Tapfumaneyi.

“The first month, we had overlooked issues to do with requisite statutory registrations and we cleared all that by 29 June.

“We then opened a bank account with CBZ, but the challenge arose when the investor was about to send the money.

“Because of the sanctions, the transaction was blocked; the investor in fact intended to transfer the entire $5 billion for the project to take off.”

It is believed that the investor has since engaged an international bank that is currently considering facilitating the transfer.

Already, preparations are underway for the groundbreaking ceremony.

The coal-to-fuel venture has been granted national project status, which allows the investor to import critical equipment duty-free.

Geologists from Vectol were deployed on site last month, while equipment for extracting coal is enroute from South Africa, where Nkosikhona Holdings was operating a coal mine.

While construction of the beneficiation plant will take between three to four years in Lusulu in the Middle Zambezi Basin, the mining venture will begin next month.

In September, Vectol is expected to invite bids through an open tendering process from companies that are interested in constructing the beneficiation plant.

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