E4.5M POWER JOINT VENTURE CLAIM HAUNTS KOBWA

MBABANE – KOBWA is of the view is that it has not breached its agreements with Maguga Power Joint Venture (MPJV).

The Komati Basin Water Authority (KOBWA) was established as a bi-national Authority in terms of the Treaty of 1992 signed by the two member States the Kingdom of Eswatini and the Republic of South Africa for the utilisation of the water resources within the Komati basin comprising of the Komati River and the Lomati River.

Implement

KOBWA’s mandate is to implement Phase 1 of the treaty which comprises the design, construction, operation and maintenance of the Driekoppies Dam on the Lomati River in RSA (phase 1a), and the Maguga Dam on the Komati River in KoE (phase 1b). The design and construction phase of the Dams were completed and currently, KOBWA’s mandate is the operation and maintenance of the Dams. In 1996, KOBWA entered into an agreement with MPJV which contained a clause that the former would refund the MPJV any withholding invoices received by KOBWA from the MPJV in terms of a contract entered into between the two Parties. KOBWA, through the use of a memorandum of understanding (MoU), delegated the responsibility for paying the refunds to Eswatini Electricity Company (EEC) in 2004. Since then, MPJV has been demanding a refund from EEC of all withholding taxes on the contract.

Responsibility

Having delegated the responsibility to make any further payments, KOBWA is disputing the claim as the directors are of the view that the latter has not breached its agreements with MPJV. “There are ongoing negotiations between KOBWA and EEC to respond to the demand made by MPJV. The total amount claimed by MPJV is E4 589 623. KOBWA has not recognised any liabilities relating to the matter as the negotiations are ongoing and at this point it is improbable that it will result in a payment, therefore due to the unlikelihood of KOBWA being required to settle, a liability is not recorded. There have been no developments on the matter in the current financial year,” shared KOBWA in its latest financial statements for the year ended March 31, 2021.

Meanwhile, KOBWA has further disclosed than an unnamed service provider has a claim of unfair termination of contract to the tune of E4 717 000. “KOBWA is defending the claim since all pre-termination notices were given to the contractor and they failed to produce statutory documentation required for them to carry out business with KOBWA as per the contract agreement. “KOBWA has declined out of court settlement advances by the contractor’s lawyers,” reads the report for the year ended March 31, 2021.

Statement

The financial statement, on the other hand, reflects a increase in total revenue from non-exchange transactions. It increased to about E257.8 million from over E95.8 million. Meanwhile, following the outbreak of COVID-19 pandemic, KOBWA made a detailed assessment of the effects specifically in light of whether it would affect the continued existence and the level of operations of the organisation. The assessment was done at the operational, Executive and Board levels looking at the risks and operational changes and effects. The Board was satisfied that the pandemic would not have an adverse effect on the going concern aspect of the business nor the level of its operations. “The effects were seen to be on operational and business processes which KOBWA has the capacity and resources to handle,” shared KOBWA.

Post your comment

Your name:

Your e-mail address:

Add your comments:

Please enter the code you see in the image:

Image:

Code: