The Zimbabwe Power Company (ZPC) has been taken to court by a local company, Realquot Construction on allegations of failing to honour a US$750 000 contract.
The failed contract was for the extension of the Hwange Power Station guest house.
The aggrieved company has since approached the High Court seeking an order declaring the termination of contract unlawful.
In addition, the company is demanding US$112 857, 48 as damages for breach of contract.
According to court papers, the amount is a 15% profit of the contract's value of US$752 383, 23, and a further US$393 499, 80 damages arising from stoppage costs incurred from ZPC.
Allegations are that on December 18, 2014, ZPC and Realquot Construction entered into a contract for the extension of Hwange Power Station guest house in accordance with specifications detailed in ZPC's tender document.
The total contract price was valued at US$1 984 031, 59 and it was agreed the two parties would work and review the prices of materials in line with the changing economic situation.
It was further agreed that any dispute arising from the performance of the contract would first be subjected to negotiations and thereafter arbitration in accordance with the law.
The court heard after construction work started, ZPC proposed major changes to the executive bedroom design and the parties agreed to vary the completion time and payment of additional costs arising from the alterations.
Court papers show that in March last year, Realquot Construction then proposed a price variation in line with fundamental changes occurring in the movement of prices of the economy.
However, ZPC suddenly terminated the agreement between the parties in a letter dated January 7, 2020.
"At the time of the defendant's purported act of terminating, the agreement between the parties, the outstanding contract price was US$752 383, 23.
"Plaintiff has suffered damages in the sum of US$112 857, 23 being 15% profit on the outstanding contract value and it being the applicable formula in the construction industry," Realquot said.
The matter is yet to be heard.