Martin Kadzere Senior Business Reporter
SALINI Impreglio JV, the Italian company contracted to build Tokwe-Mukosi Dam in Masvingo Province has agreed to be paid the outstanding amount in US dollars, paving way for the completion of the country’s largest inland dam, sources have said.Salini is owed about 12 million euros, but the Government had not been able to raise the funds in euros due to foreign currency shortages. Officials at the Ministry of Finance and Economic Development confirmed the Italian firm has now agreed to be paid in US dollars.
“In terms of the contract, Salini was supposed to be paid in euros but due to foreign currency shortages, the Government could not raise the money,” said one official.“Following discussions, Salini has now agreed that the arrears be settled in US dollars.”
Salini had threatened to leave the site by the end of this month over the arrears.In August, the company wrote to the Government giving notice of its intention to immediately stop construction works over outstanding payment. The dam is 96 percent complete and remaining works include roads, valve and steel works, grouting and dry works. Failure to mobilise requisite funding would have resulted in Salini leaving the site and moving their equipment to other project sites. This would have resulted in huge site remobilisation costs in the event the project resumes at a later stage.
In addition downstream economic activities and benefits of the expanded irrigation programmes and the power generation plant would have been deferred, to the detriment of Government and beneficiaries of the vital investment in the water resource.The construction of the dam commenced in April 1998 and was suspended a year later due to funding constraints. The project then went through a stop-start process from 2001 to 2005.
Construction works resumed in May 2011 with initial plans to complete the project in November 2013. Impoundment was to start in November 2013 with the first supply of irrigation water targeted for 2014.
The contractor was granted an extension to complete the project by August 2014 mainly because there were additional excavations on the foundations as well as financial constraints.The Government has been funding the construction of the Tokwe-Mukosi from its own resources. These resources have been through the Public Sector Investment Programme, being allocations from the National Budget.
Since 2001, the Government has spent $262 million on the dam with an additional $13 million having been set aside in the 2015 National Budget. Irrigation will be the main economic value to be realised from the dam. At a yield of 364 000 megalitres per annum, the dam will have sufficient water to irrigate up to 25 000 hectares.
Economic value will also be realised from the mini hydro project into which the Government has already made significant investment through providing funding for civil works.