..Harare City Council to pay US$3.5m if contract is breached
GEOGENIX BV local representative and executive chairperson of the Pomona waste-to-energy deal Delish Nguwaya has warned Harare City Council against reneging on its contractual obligations, accusing mayor Jacob Mafume of single-handedly trying to block the project.
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Nguwaya said council will have to pay a penalty fee exceeding US$3.5 million for breach of contract if it insists on blocking the project. He vowed that the company will not stop pursuing the Pomona dumpsite project. He was speaking to editors and senior journalists during a tour of the dumpsite.
“There is no problem, but the issue is when we did the contract, Mafume was not there so he is saying everything that we did was not correct. He wants to start afresh. We did the contract with the same councillors who are saying something else,” Nguwaya told journalists.
“We met him and agreed to say everything is in the feasibility study, they did not read the papers. The way forward is we will continue to work. They are going to pay because they need to honour the contract.”
Mafume recently told The NewsHawks that council will not pay the US$22 000-per-day bill that has now ballooned to close to US$1 million since the project began.
The transaction, under the deal titled Concession Agreement to Design, Build and Operate the Harare Pomona Waste Management Facility and Waste-to-Energy Power Plant, will see council paying US$40 (excluding applicable value added tax) per each tonne of waste deposited by Harare at the site. Harare will pay the fee to the contractor within 30 days from the date of the invoice receipt by the contractor.
“In case the COH delays in making the payments 60 days from the date of submission of their invoice from the contractor then the contractor has the right, reckoned from lapse of 60 days aforesaid, to extend the term of the construction period for the same period of the payment delay and also to stop providing services to the COH,” the deal reads.
Invoices, the deal said, are supposed to be issued within the last day of each month.
“In the event the fee has not been paid within the periods specified in Article 22, the COH shall be liable to pay to the contractor the late payment interest calculated under the applicable law, on the outstanding service fee amounts. Such interest shall be due thirty (30) days after the invoice becoming due and payable.”
Councillors linked to the Citizens’ Coalition for Change (CCC) have through a special council resolution reversed the transaction, accusing the MDC-T councillors of working in cahoots with government officials to push for the deal for self-aggrandisement.
“We will not pay even a cent. We have not paid anything as yet (and) we urge every stakeholder to continue as normal,” Mafume said recently.
The matter is now being challenged before the courts with Harare North member of the National Assembly Allan Markham saying there was no due process followed in coming up the deal that will prejudice the local authority and residents.
Meanwhile, as the fight over the Pomona waste-to-energy deal between Harare City Council and Geogenix BV continues, the Local Government ministry has warned the city against failure to settle its bill, saying the local authority faces serious consequences for defaulting.
In a letter dated 16 June 2022 addressed to acting town clerk Phakamile Mabhena Moyo, the permanent secretary in the ministry of Local Government and Public Works, Zvinechimwe Churu, said council should settle the May bill, which had reached US$780 890. Currently, the bill has surpassed US$1 million.
“I have taken note of the contents of the letter dated 10 June 2022 in which you state that you are unable to pay the invoice raised by GEO Pomona in the amount of USD$780, 890.00 for the month of May,” the letter reads.
“May I remind you that the action not to pay has serious consequences, not only with respect to council’s obligations, but also on government who is the guarantor to the project.
“Failure to pay will result in accumulation of debt through interest, arrears, penalties and fees due and payable. The amount will become unsustainable should this stance be sustained beyond the May payment.”
The permanent secretary said council should settle this and coming bills without fail, a directive frowned upon by the city fathers, who described it as illegal and inappropriate.
“We request a response from yourselves that you will honour the bill for May as well as the other coming months as they fall due. It is thus our expectation that the operations at Pomona should continue uninterrupted and council should abide by the contractual terms provided for in the existing contract,” the letter says.
The letter was copied to Local Government and Public Works minister July Moyo, minister of State for Provincial Affairs and Devolution Oliver Chidawu and Chief Secretary to the President and Cabinet Misheck Sibanda.
According to the agreement signed between Harare and the Netherlands-based firm, the city is expected to pay US$40 per tonne for 500 tonnes of waste it disposes of at Pomona dumpsite.
“On financial matters, as from the commencement date, City of Harare (COH) shall pay the fee to the contractor which shall be equal to the rate of US$40 (excluding applicable value-added tax) per each tonne of waste deposited by COH at the site, operated by the contractor from site’s handover date. COH will pay the fee to the contractor within 30 days from the date of the invoice receipt by the contactor,” the contract reads.
Harare has no capacity to deliver the 500 tonnes of waste a day because of lack of resources, as it currently has 10 trucks.
“If in a given calendar year, the actual annual waste quantities deposited by COH by the contractor is less than the minimum annual guaranteed waste quantity, the contractor shall invoice and shall be entitled to receive an annual fee, which is the amount equal and not less than an amount equal to minimum guaranteed waste quantity (in tonnes), multiplied the fee per tonne of waste,” the contract reads.
Councillors on Thursday, however, insisted they will not be intimidated into making the payments as investigations continue under a special committee set up to probe whether due process was followed.
“We receive directives from the minister according to our reading of the Urban Councils Act. We certainly have challenges with the letter from the permanent secretary,” Mafume said.
“People must not be in a habit of writing letters to council outside the confines of the Act,” he said and was supported by fellow councillors. Council has given the councillor Ian Makone-chaired probe team an additional 14 days to wind up its investigation into the deal.
