The Reserve Bank of Zimbabwe (RBZ) has reportedly failed to pay part of its debt to Equatorial Guinea for local investment in a 40MW solar project in Bwoni Village in Seke District, the High Court has been told.
This emerged in a case Old Mutual Life Assurance Company (Old Mutual), a creditor in Harava Solar Park is seeking to save the power company after failing to fulfil contractual obligations.
In January 2018 the Harava Solar Park was granted a Prescribed Asset Status and in February 2018 was also approved as a National Project Status by the Ministry of Finance and Economic Development.
In addition, Equatorial Guinea had secured Zimbabwe Investment and Development Agency (ZIDA) approval in February 2022 to invest in Harava Solar Park and now 14 months later RBZ failed to abide by their exchange control to release US$ 15 million for local investment.
The insurance company wants Harava placed under corporate rescue.
According to court papers, Old Mutual is a creditor and investor in Harava having invested into it through a debt instrument the sum of US$1 837 171.
Harava, cited as the first respondent in the application by Old Mutual has defaulted in settling its indebtedness and has made numerous unfulfilled promises to settle the debt.
The RBZ had agreed to give US$15 million to Equatorial Guinea if they invested in Zimbabwe.
''The government of Equatorial Guinea through its Sovereign Wealth Fund has expressed interest to invest in Harava to the sum of US$15 million by way of equity subscription.
''Old Mutual is informed that a Subscription Agreement to this effect was executed in November 2021, ZIDA approval was granted on 15 February 2022, and Exchange Control Approval under reference INV/ECOCZWHX/2022/Equity#000224 was granted on 3 October 2022.
''We are advised that Harava is now working on the disbursement of these funds through the Reserve Bank of Zimbabwe,'' said Old Mutual.
Old Mutual said it has been patient in this regard as it believes that the project which is the subject of its investment can still be salvaged.
Harava is a fully licensed independent power producer which is in the process of setting up a 20-megawatt solar power plant project in Bwoni Village, Seke District, Dema.
The project is still under construction, with 6MW of panels already mounted on the ground, but not yet connected to the grid due to missing substation components.
To date, the project has acquired material and services to the tune of U$11.8 million (grid infrastructure, mounting structure, substation, transformers, cables, inverters, solar PV panels) but has a funding shortfall to complete the project.
To connect the 6MW of panels that are already mounted the project will require additional funding of US$3.4 million.
For it to get to 10MW from the current state, an additional investment of US$4.75m would be required whilst a further injection of US$10.35m would get the project from the current state to 20 MW.
One of the debtors, Ever Prosperous World Wide Limited obtained a Court Order against Harava for the payment of US$ 10 115 218.02 and has caused a writ of execution to be issued against its solar plant.
The court was also told that Harava has since entered into an Offtake Power Purchase Agreement with the Zimbabwe Electricity Transmission and Distribution Company for channeling the electricity to be produced by the solar plant into the national grid.
''Harava is currently not able to settle its indebtedness. It needs time to complete construction and trade itself out of its debts.''
Old Mutual said its reasons for applying to place Harava under corporate rescue is because the survival of the company is crucial.
It said among other things, the project is designed to contribute to solving the power crisis in Zimbabwe as the electricity generated is channeled into the national grid as per the 25-year Offtake Power Purchase Agreement with Zimbabwe Electricity Transmission and Distribution Company.
''The Project has the capacity to generate approximately 400Wh per year which is capable of powering about 40 thousand households.
Sign up for free AllAfrica Newsletters
Get the latest in African news delivered straight to your inbox
''The project will significantly contribute to the production of clean energy with a carbon credits volume of about 40 000 000 tonnes a year,'' read the application.
The court has also been told that the project has created over 200 rural jobs with room for creating even more employment.
''Harava requires restructuring of its debts and reshaping its shareholding so that it is relieved of the debt burden. With a restructured balance sheet it will be in a position to attract funding to get the project into operation.
''It may simply require a few months for the slow-moving wheels of government to release the funds to enable the Equatorial Guinea Sovereign Fund to acquire equity in the 1'' Respondent which will resolve all its financial difficulties,'' read the application.
Old Mutual proposed that Dr Oliver Mtasa of Crowe Horwath Welsa Chartered Accountants be appointed as Harava's corporate rescue practitioner.
It also wants all actions against Harava to be stayed during the corporate rescue proceedings.
