Harare City Council has been served with a default notice after failing to pay Geo Pomona Waste the May 2022 Service fee. According to a deal between Geo Pomona and the local government authority, Harare is supposed to pay a monthly fee of US$22 000 a day for waste deliveries to the Netherlands-based company, a figure considered exorbitant by government critics. In a notice seen by Pindula News, Dylish Nguwaya who is Geo Pomona’s Zimbabwe representative says attempts by Harare to cancel the agreement had no basis.
NOTICE OF DEFAULT
In accordance with article 30.1 of the JOINT VENTURE CONCESSION AGREEMENT TO DESIGN, BUILD, OPERATE AND TRANSFER OF THE HARARE POMONA WARE MANAGEMENT FACILITY AND WASTE TO ENERGY PLANT, entered into between the City of Harare and GeoGenix B.V. on 9 March 2022 (the “Concession Agreement”), we hereby invoke our right to notify you that as of 1 July 2022, the City of Harare is in default of its obligation to pay the fees to Geo Pomona Waste Management (PVT) Limited (the “Company”) within the prescribed term.
On 2 June 2022 the City of Harare received an invoice dated 1 June 2022, issued by the Company for waste management services performed over the month of May 2022 (the “May 2022 Service Fee”). Pursuant to article 22.2.4 of the Concession Agreement, the City of Harare had 30 days to pay the May 2022 Service Fee. Having failed to do so, and in accordance with article 22.4 of the Concession Agreement, the City of Harare is liable for late payment interest. Consequently, the Company is charging the prescribed interest rate of 12% as provided for by, the Central Bank of Zimbabwe over the outstanding May 2022 Service Fee from 1 July 2022 per annum, applied pro rata for each day this invoice remains unsettled.
Article 29.2 (b) of the Concession Agreement provides that a “failure to pay invoices for a period of more than (30) thirty days form the moment that they become due and payable”, warrants a Contracting Authority Event of Default. In addition thereto, we note that the City of Harare’s official actions thus far leads us to reasonably believe it does not intend to meet its contractual obligation to pay the May 2022 Service Fee in the short term either. This in itself warrants an additional Contracting Authority Event of Default, pursuant to article 29.2 (a) of the Concession Agreement.
We remind you that when the Contracting Authority Event of Default is in effect, the Concession Agreement accords us the following remedial rights to be taken within 90 days of this Notice:
a. Extend the construction period and thus delay the project handover delivery date (article 21. 1);
b. Cease all services to the City of Harare (article 21.1); and/or
c. Terminate the Concession Agreement resulting in Early Termination Compensation Amounts immediately due and payable by the City of Harare (article 32.2 jo. article 33.1 (I)).
As a final point, we once again reiterate that your letter dated 10 June 2022, in which you attempt to notify us of a suspension of the Concession Agreement has no basis, as the legal relationship between us and the City of Harare is regulated by the terms of the Concession Agreement. Consequently, it strictly provides for certain procedures to be followed, of which a ‘suspension of the Concession Agreement’ is not a remedy provided for.
We trust that you will remediate this Event of Default by settling the May 2022 Service Fee as soon as possible. Yours faithfully, Mr. Dilesh. Nguwaya Executive Chairman of GEO POMONA WASTE MANAGEMENT (PVT) LIMITED Country Representative of GeoGenix B.V.
CC GeoGenix B.V. Ministry of Finance and Economic Development, Hon Prof.M. Ncube Ministry of Local Government and Public works, Hon. J.Moyo Chief Secretary to the President and the Cabinet, Dr. M.J.M Sibanda Deputy Chief Secretary to the President and Cabinet, Eng. A. Marawa Minister of State for Provincial Affairs, Harare Metropolitan Province, Hon. O. Chidawo Secretary for Provincial Affairs and Devolution, Harare Metropolitan Province, Mr. T. Muguti