HomeLocalHarare council faces hefty loan penalties

Harare council faces hefty loan penalties

Sources at Town House said Cabinet had not yet approved the loan earmarked for upgrading Harare’s dilapidated water and sewer infrastructure, as differences have emerged over fresh demands by the Chinese that council pay an additional 8% interest.

“The Ministry of Finance are the guarantors of the loan and indicated that paying the 8%would make the loan expensive. Council has since requested the legal opinion of the Attorney-General,” said a senior council official.

Initially, the Chinese were said to have demanded a down payment of US$14 million before the loan could be released. “The Chinese were told that if the city could raise $14 million, then there would be no need for the loan.


They (Chinese) then reportedly came up with another demand that council pay 8% interest because the city now wanted to access the loan in three tranches  instead of  one,” said another official.

Town Clerk Dr Tendai Mahachi confirmed that Cabinet had  not yet approved the loan, but denied that the Chinese were making fresh demands. “There is nothing like that,” said Mahachi.


“This is a government-to-government loan which is still awaiting Cabinet approval. Conditions of the facility will be known later. People are just speculating. Let’s wait for the Cabinet approval.”

China National Machinery and Equipment Corporation (CNMEC) is expected to do the upgrading works under the project, which is part of the nine economic, technical co-operation and loan deals worth over US$700 million signed between Zimbabwe and China during a visit by Chinese Vice-Prime Minister Wang Qishang. Finance minister Tendai Biti signed the three loan agreements with Li Riougu, the president of the China Export and Import Bank.


Facility to boost  water supplies


Harare Town Clerk Tendai Mahachi says the US$144 million loan facility which was extended by the China Export and Import Bank was expected to  improve Harare’s water treatment capacity from the current 620 megalitres to 700 megalitres a day.

A water reclamation plant along the Bulawayo road, idle for some time now, would also be commissioned using the loan, thereby enabling the provision of an additional 40 megalitres a day.

“The Chinese loan is set to significantly increase the amount of water available to the people,” said Mahachi. “We are also going to sort out the distribution network by replacing rotten water pipes. The benefit of doing this is reducing what we call non-revenue water, which is water being lost along the way and not going to the people.”

Mahachi said the Chinese were also proposing to open a plant to construct water pipes and hand it over to council once the upgrading project was complete. The sewer system will also benefit, with the Firle and Crowborough treatment works being upgraded to handle more sewerage, thereby enabling all raw sewage to be treated before being discharged in the rivers.

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