SPB intervenes in ZPC tender wrangle

The Zimbabwe Power Company (ZPC) has sought permission from the State Procurement Board to cancel the $113 million contract for re-powering of Munyati Power Station awarded in 2015 to an Indian company, Jaguar Overseas Limited (JOL), citing the firm’s delays in securing funding to rehabilitate the power plant.

JOL was awarded the engineering, procurement and construction tender to re-power the plant and this entailed replacing 15 boilers with modern technology, refurbishing 2×50 megawatt steam turbines, overhauling cooling towers, water treatment plant, civil works, dredging and rehabilitating a weir on Munyati River for water supplies to the thermal plant.

The attempts to cancel the tender over purported delays in securing funding have, however, elicited a furious response from the Indian company that claims the manoeuvres made by ZPC were irrational, illegal and dishonest in that the power utility was also partly to blame for the delays.

JOL has threatened bruising legal battle if ZPC cancelled the contract. SPB principal officer Mr Samson Mutanhaurwa, wrote on June 26 this year to JOL chief executive Deepac Mathur notifying his company of the request by ZPC for permission to rescind the contract and directed the company to present its side of the story over the claims by ZPC.

“At a meeting No 43/ 2017 held on June 22, 2017, members noted that the accounting officer was requesting for authority to cancel the contract due to failure by Jaguar Overseas Limited to obtain funding for the project.

“Members agreed that Jaguar Overseas Limited should be given an opportunity to respond to the accounting officer’s allegations.

Accordingly, the State Procurement Board has, through PBR 0554 of June 22, 2017, having reviewed the accounting officer’s submission in line with SI 126 of November 25, 2015 resolved that Jaguar Overseas Ltd be and is hereby directed to comment on the allegations, in line with section 42 of the Procurement Act within 15 days from notification, in line with audi alteram partem rule,” said SPB in the letter signed by Mr Mutanhaurwa.

Efforts to get a comment from ZPC were fruitless yesterday.

JOL has claimed that ZPC is making attempts to cancel the tender on spurious grounds with the ultimate objective to award it to China Gezhouba, which the Indian firm said had always been the preferred bidder, but lost out to lowest bidder to specification, JOL and its partner.

The Indian electrical engineering firm and its local partner, Intratrek Zimbabwe, landed the multi-million tender, as the lowest bidder to specification, in a complex three envelope tender process that closed in August 2014.

The stringent tender process required bidders to be led by a company with over five years experience in power engineering, with a robust balance sheet and annual turnover in excess of $50 million for a period of at least five years.

Bidders were also expected to meet the wide scope of works. Successful bids were Helcraw (Zim), State Nuclear Power Plant Design (China) China National Technical Import Export Corporation, Shadong Electrical (China), China Gezhouba Group Corporation, Pito Investments (Zimbabwe) and Jaguar Overseas and its partner, Intratrek Zimbabwe.

The first round of the technical and funding compliance required bids that were responsive to a high threshold score after a panel adjudication. In addition to traceable and realistic funding submissions, an exhaustive technical checklist was required to demonstrate ability to re-power the plant, now over 60 years old.

“It is common cause that the employer adjudged our submission in this open tender to be compliant and responsive. Furthermore, our tender was scored lowest compliant bid to specification after the second round,” Mr Mathur said.

“The employer, in an unscrupulous and unprecedented move, attempted to smuggle in the second round placed bid, China Gezhouba, as the winner of this tender in a clear violation of the procurement Act and its regulations,” the JOL chief executive said.

“ZPC, in surprising turn of events, after having found the (JOL) bid to be compliant, both technically and financially, attempted to contradict themselves. Their attempt to question funding smacks of sinister underhand activities and is another attempt to benefit the losing Gezhouba bid, which they had brazenly recommended as the winning bid,” he said.

“The allegations of failure to raise funding are completely unfounded. The lead financiers, BancABC, stated in no uncertain terms that subject to conditions precedent being complied with, they are ready to commit 15 funding.

“Regardless, we cannot commence a conversation around failure or success of funding at a time when the contract has not been signed. Funders will base funding terms and conditions on bona fide signed contract for project. Zimbabwe is a pariah in the financial markets on account of sanctions, which have negatively affected the national credit rating.”

JOL said ZPC had dodged and procrastinated signing the contract for over a year, this, coming at a time when Zimbabwe is facing severe power deficit.

“The allegations by employer are scandalous, dishonest and disingenuous.”

The Indian firm said several institutions, among them Afreximbank, PTA Bank, and DBSA, had expressed strong interest in funding the project.

“DBSA in particular has expressed repeated interest to support and lead a fundraise for Munyati. On request, they will issue a letter of support.”

JOL also cited other viable funding options such as Treasury Bills and Energy Bonds, in terms of which Government has in the past backed through awarding national project and prescribed asset status and these include Tokwe Mukosi.

It said the allegations by ZPC exposed its bias towards China Gezhouba.

“The above funding options only represent the tip of an iceberg.”

The Indian firm said it was aware that the origins of the funding allegations raised by ZPC were based on the Harare Power Station transaction, for which funding is yet to be secured since the tended was awarded.

“The delay in funding (for Harare) arose on account of (ZPC) meddling with our fund raise process. It is common cause that the employer arbitrarily coerced us to engage with Afrexibank, who tabled a funding offer, which they now claim is too expensive,” the Jaguar Overseas chief executive added.

“As a result of the stalemate above, caused by them, we are now in a quandary over the funding of this important project. It is worth noting that there is nothing unusual about delays in closing funding, more so, at a time when the economic landscape continues to shift over introduction of bond notes, nostro challenges and the effect of various policy interventions by Government. We remain adamant and are in fact pleased to reconfirm that with regards to this project, Afreximbank has made significant commendable progress and final approval is expected soon”

JOL said while it was aware ZPC had become a law unto itself, “and we took comfort from the fair attempts by the SPB to check the facts independently. You will agree that we have demonstrated that this is nothing, but a smokescreen to disguise an attempt to corruptly award an undeserving bid. It is curious that China Gezhouba themselves have expressed no reservations about the tender process and have accepted the result.” The Herald