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The role of procurement in EAC integration


Billy Rwothungeyo
September 04, 2014
The role of procurement in EAC integration                                          
 
Lately, the East African Community (EAC) heads of state have been walking the talk of the integration of the regional bloc.
The governments of Kenya, Uganda and Rwanda have committed to undertake an ambitious project; the Standard Gauge Railway (SGR) that will snake her way from Mombasa to Kampala and finally end in Kigali.
The proposed project is also supposed to connect to the South Sudan’s capital Juba, from Tororo. The world’s youngest nation has expressed her willingness to join the EAC regional bloc.  The project is aimed at easing the pressure on road transport infrastructure along the northern corridor, which shoulders 94% of all freight movement.
Similarly, Kenya, Ethiopia and South Sudan are executing another audacious infrastructure development project, the Lamu Port-South Sudan-Ethiopia Transport (LAPSSET) corridor project. Uganda is also keen in the project, as evidenced from President Yoweri Museveni joining counterparts Uhuru Kenyatta, Hailemariam Desalegn and Salva Kiir from Kenya, Ethiopia and South Sudan respectively in a recent Nairobi summit to explore joint financing options for the $22b LAPSSET project.
Strategic role of procurement in delivering these projects
These projects were masterminded to promote and advance the East African Common Market Protocol by boosting linkages that facilitate the movement of goods and services across regional borders.
What rarely pops up in discussions is the role procurement will play in pulling off these mega strategic projects. If the procurement processes for these projects are not managed with the utmost professionalism and scrutiny, these projects will be delayed due to administrative reviews.
Prof. Benon Basheka, a procurement expert and the Dean of the School of Business and Management at the Uganda Technology and Management University says that the procurement will play a role in the success of these projects.
“All these developments have an implication on the core function of these governments. And because procurement is one of the facilitators of this kind of work, it becomes a key input as far as integration is concerned,” he says.
Already, the procurement process for a contractor to undertake Uganda’s part of the Standard Railway Gauge project is in shambles, with the China Civil Engineering Construction Corporation (CCECC) and China Harbour Engineering Company (CHEC) involved in a long and bitter fight over the tender to do Uganda’s part of the job.
The upgrade of Uganda’s existing railway infrastructure to standard gauge will cost $8b. Kenya is proceeding well on the project which has a completion deadline of March 2018.
Hedwig Nyalwal, the Chief Executive Officer (CEO) of the Kenya Institute of Supplies Management (KISM) concurs with Basheka on the significance of procurement and why it should be given more attention.
“In these projects, procurement, through various strategies, will be supporting initiative towards achievement of value for money by implementing the project economically, efficiently and effectively,” he says.
Trade enabler
Nyalwal argues that attitudes towards procurement need to change with the furthering of the integration initiatives, so that East Africans can have more opportunities of doing business across borders.
“EAC partners must realign to view procurement as a strategic function within organisations with potential to contribute to proper selection of projects, cost management, successful delivery, completion of projects, goods and services,” he says.
Nyalwal argues that with more multinationals setting up camp in the region, the right procurement framework would create more opportunities for East Africans in the supply chain as the investors seek for local raw materials.
“Some of these entities have a sourcing strategy including regional sourcing as well as outsourcing in some aspects of manufacturing. These procurement strategies act as tools that promote trade and therefore contributing to regional integration,” he says.
Nyalwal says the ripple down effect will boost trade further in The Common Market for Eastern and Southern Africa (COMESA), which all EAC member states are part of.
“COMESA members are predominantly agricultural countries who rely on strong value chains to meet individual countries food requirements. These value chains are established through national policies and implemented on sound supply chain strategies to manage the pendulum conditions of scarcity and glut,” he reasons.

What needs to change?
Harmonise legal regimes
Experts agree that procurement legal regimes in the East African member states need to be harmonised. Basheka says while the philosophy and vision is integration, the laws have not yet trodden a similar path.
“There is no procurement law that is applicable in all East African countries. Kenya has her own procurement law, so does Tanzania, Uganda and the other partner states. While we have the East African Procurement Forum, we have yet to agree on a common legal framework to facilitate integration,” reasons Basheka.
Colline Mpaata, a procurement specialist working with Strategic Insights Consult Management, Strategy and Business Development consultancy firm says attempts at harmonisation should take a multi-sectorial approach.
“This will enhance the participation of key private and public sector players. In a bid to enhance private sector led economies it will be important for the participation of the private sector and civil society in the harmonisation of the regimes. In as much as the member states involved have committed themselves towards the harmonisation of policies it’s success will greatly depend on the speed with which policies, rules and regulations, standards and the institutional frameworks can be harmonized,” he says.
Mpaata also says standardization from harmonisation will greatly reduce on the cost of doing business and brings about competition.
“With the harmonisation public procurement will provide a breeding ground for national and regional businesses to grow and compete globally. This will encourage partnerships across the region in the execution of public contracts without any limitations. For instance this will see the increased participation of Small, Medium and Micro Enterprises in public contracting.”
Nyalwal says harmonized regulations will further make it easy for the free movement of goods and services across the borders.
“Therefore a harmonized legal regime that governs procurement will facilitate trade and integration by allowing suppliers to trade freely with no legal bottlenecks arising from overlaps or inconsistencies in the individual nation’s legal regimes,” he says.
Governments being the biggest spender in each of the EAC economies, opportunities are rife for private sector players to take part in public procurement.
However, Basheka fears that individual interests of countries, if not handled well in any move to harmonise the legal regimes, could jeopardise such efforts.
“To strike the national balance, a special clause can be put, in terms of the preference, that while we are agreeing to work together as the five East African countries, on matters of particular nature, each country can have a reservation scheme for its nationals,” he says.
Need for EAC procurement secretariat?
There have also been calls from certain circles for the establishment of an EAC procurement secretariat. In fact, one of the resolutions at the recent EAC procurement forum in Kigali was that it be fast tracked.
Mpaata says that a secretariat will improve national procurement systems which will strength the member states within the East African Region.
“One of the greatest challenges faced within the region is the difference in reporting of data estimating public procurement. However with the creation of a secretariat, harmonization in reporting can be achieved where data on estimates is available from official government publication from member states can be accessed at one point,” he says.
Legalising professional bodies
Experts have also been calling for the legalization through acts of parliament of professional bodies that bring together procurement practitioners in the different East African countries.
Proponents of this idea say that all this would promote professional ethics by accrediting their members—the way the law and engineers’ societies do.
“Further, national procurement associations need to develop regional standards, including national certifications that are recognized regionally to enable skills exchange and knowledge transfer. These will further promote regional integration,” says Nyalwal.
Even on this, the EAC member states are not on the same level. In Kenya, KISM was established in 1976 as an umbrella body for those in procurement and supply chain management field.
The passing of the Supplies Practitioners Management Act in 2007 gave KISM the legal mandate to regulate the conduct of professionals under her tutelage.
In East Africa’s largest country, Tanzania, the Procurement and Supplies Professionals and Technicians Board (PSPTB) was established in 2007 by an Act of Parliament.
In Uganda, the Institute of Procurement Professionals of Uganda (IPPU) was formed in 2008, spearheaded by the Uganda’s finance ministry and industry regulator, Public Procurement and Disposal of Public Assets Authority (PPDA).
However, the IPPU bill, a legal framework to govern procurement function in Uganda is just in the works, yet to be presented to parliament.
Rwanda and Burundi are yet to come up with such bodies.

Nigerian commissions new UAV


Written by Oscar Nkala, Thursday, 19 December 2013

Nigerian President Goodluck Jonathan has commissioned the country’s latest Unmanned Aerial Vehicle (UAV) which will be deployed as an intelligence, surveillance and reconnaisance (ISR) platform in the fight against terrorism, maritime piracy and crude oil theft.

The UAV was unveiled in a ceremony on Tuesday attended by senior government officials and defence officials led by Air Force Chief of Staff Air Marshall Alex Badeh at the Kaduna Air Force base.

The aircraft, which has been named ‘Gulma’ meaning ‘gossip’ in the local Hausa language, was produced by the Nigerian Air Force Institute of Technology (AFIT) with the help of aerospace engineers from Cranfield University in Britain. Since 2007, the British institution has partnered the AFTI as part of the Nigerian government’s bid to develop an in-house capacity for advanced aviation design, research and development.
Powered by a 17 hp engine, the Gulma is built on a composite aluminium alloy structure, operates via radio control on a Micro Pilot FCS avionics system and weighs 40 kilogrammes.

It has a maximum cruise range of 923 km and a top flight speed of 86 knots. It can cruise at a maximum altitude of 10 000 feet and has an endurance of up to 5.8 hours. The AFIT team has so far trained 15 pilots to operate its growing fleet of unmanned aerial vehicles.

Speaking at the unveiling ceremony Jonathan said the unveiling of the aircraft is a milestone in Nigeria’s bid to develop a domestic defence and aerospace industry.

“Besides its diverse military applications, the UAV provides us with a range of benefits in disaster management, power line surveys, law enforcement operations, telecommunications, weather monitoring and aerial imaging/mapping. It is also becoming an important tool in news coverage, environmental safety monitoring, and oil and gas exploration surveys,” Jonathan said.

He said that through innovative research and development programmes, the Nigerian Navy, Air Force and Army engineering divisions have in the course of this year produced the country’s first indigenous navy combat vessel, armoured personnel carrier (APC) and bomb detection and disposal equipment.

Badeh said the launch of the Gulma underlines the country’s strong resolve to achieve self-sufficiency in military aviation technology and capability. “The Gulma has been designed to meet vast expectations and needs. It could be employed by the armed forces and security agencies for the protection of Nigeria. We also envisage viable partnerships with agencies such as National Emergency Management Agency (NEMA) in the area of disaster management and the Nigerian Air Space Management Agency (NAMA) in the area of weather forecasting,” Badeh said.

He said the government should upgrade the AFIT from a limited innovative research outfit into a viable aircraft production centre with the capacity to mass-produce indigenous UAVs. Acting defence minister Labaran Maku said Nigeria needs a comprehensive policy to support the development of indigenous UAVs to enhance the operations of security services presently battling the Boko Haram insurgency in the north and maritime crimes and oil theft in the Gulf of Guinea and Niger Delta areas.

He said it is important for the Air Force to allow other security agencies to incorporate its UAVs into their operations so that the whole sector can make use of their full strategic potential. “Emphasis should now be placed on the harmonisation of our research and development programmes towards the attainment of a common goal to transform the Nigerian Armed Forces into one of the top fighting forces in the world.

“Working hand in hand with NAF and other (security) services, the Federal Ministry of Defence shall sustain its efforts at encouraging local content in its pursuit of military asset acquisition. Also the Defence Industries Corporation of Nigerian (DICON) shall be further empowered to provide support to the services in their respective and collective research and development efforts,” Maku said.

Earlier this year the Nigerian Air Force flew two indigenously developed unmanned aerial vehicles, which were presumed to be versions of the Amebo, which was unveiled at Air Expo 2012 in Kaduna. The Amebo I, II and III UAVs were developed by MSc students from the Air Force Institute of Technology. At the Air Expo, AFIT stated that test flights for Amebo I and II had been carried out by UK pilots in 2010 and 2011, but that a NAF pilot would perform the Amebo III test flight.

All South Africa construction majors ‘involved’ in collusion, price-fixing – Patel


Engineering News

By: Natalie Greve

11th April 2013

Economic Development Minister Ebrahim Patel has said that all the major South African civil engineering and construction companies currently active in the sector have been involved in infrastructure-related collusion and price-fixing.

“This problem is huge and pervasive in the infrastructure space,” he said at the inaugural Project and Construction Management Professions Conference on Thursday.

The State reportedly lost billions of rands through large-scale collusion and price-fixing by private sector companies during several past infrastructure projects, which instigated investigations by the Competition Commission into several completed public build projects.

These enquiries, which included investigations into the Gautrain project and several stadium developments, uncovered substantial evidence of collusion and price fixing by private sector participants, the Minister noted.

In cases involving critical projects, a number of companies came forward to acknowledge their involvement in the unlawful practises, Patel added.

“We have received about 400 admissions of incidents of collusion by companies in the sector,” he commented.

South African Council for the Project and Construction Management Professions (SACPCMP) president Professor Raymond Nkado said he was “shocked” that registered members of the SACPCMP had been found to have been involved.

“As a council, we have decided that we might take additional disciplinary action against these [companies],” he said.

Fast-Track Process
Based on the evidence gleaned from the commission’s investigations, which indicated the pervasiveness of the involvement by private companies, it was decided to introduce a “fast-track settlement process”, which would avoid lengthy legal processes that could persist for up to eight years, and which Patel said could potentially distract the project management process.

“We approached the industry and said we were prepared to put a voluntary disclosure process on the table, which would bring this to a conclusion expeditiously. In return, what is required is full disclosure, a commitment to end the cartels and an acceptance that the law must take its course,” he explained.

Once the disclosure process had been completed and admission of guilt received, the commission would then determine appropriate fines or penalties related to the value of the project.

Several such processes between the Competition Commission and private companies were currently under way, with most in the final stages, where the extent of the penalty was being determined in cases where organisations were “improperly enriched”.

Patel added that the first company to come forward and admit collusion would receive preferential treatment in terms of the penalty levied.

“We also take into account the extent of cooperation, so that there is an incentive to come clean. However, these companies will still have to pay substantial penalties as prescribed by the Competition Act,” he cautioned.

In cases where investigations implicated public servants, this information would be referred to law enforcement agencies.

There would be public disclosure once settlements had been reached.

Incentivisation

Public Works Minister Thulas Nxesi added that the findings of the investigation challenged the common perception that corruption and malgovernance was only pervasive in the public sector.

“The opinion that only government has such problems has been proved incorrect. There are huge problems in the private sector and we must expose them,” he said, encouraging the private sector to engage in “self reflection”.

Nxesi noted that key to the prevention of corruption in infrastructure projects was the establishment of a strong financial system, transparent procurement processes and incentivisation.

Moreover, Patel advised that the competition authorities had used the findings of the investigations to identify networks and channels used by companies in collusive practises and had identified the lead players and managers.

This would be used to develop internal preventive controls to reduce the opportunity for future collusion.

In addition, Patel said the CEO of any company awarded an infrastructure tender would be required to sign an “integrity pact” that committed them to competitive and noncorrupt practises and to create a culture in their organisation in which anticompetitive behaviour was discouraged.

“This will require executives to commit personal responsibility and liability,” he said.

The integrity pact was currently being piloted in a number of infrastructure tenders and would be fully implemented throughout the course of this year.

Patel said it was critical that the new phase of national infrastructure development not be characterised by similar high levels of collusion and price-fixing.

“Companies will have to make an important calculation. In the past, they thought collusion was a no-brainer; that they would secure the contract and walk away with the money. Now they see that we have developed the investigatory capacity to track the evidence down and to bring companies to book. That is the most important breakthough for us,” he said.

Edited by: Chanel de Bruyn

Kenya: Procurement law set for review


 

Sunday Nation

By  TOM MOSOBA tmosoba@tz.nationmedia.com

August 18th, 2012

IN SUMMARY

  • The review is in response to a spate of court cases and controversies that continue to plague tendering for major public projects, including those in critical areas such as the forthcoming General Election, national security and infrastructure development, he said.
  • Local suppliers also want to use the window to seek legal protection against stiff competition from established foreign firms while a stringent appeals formula is being proposed as the best way to escape prolonged litigation among querulous bidding parties.
  • But the law society says corruption and lack of capacity in public entities, rather than the flaws in the law itself, were to blame for the procurement gridlock.

The procurement law is finally to be reviewed to remove bottlenecks in tendering for public projects and make it easier for private entities to transact business.

The ministry of Finance is spearheading the process to amend the Public Procurement and Disposal Act 2005 and attendant regulations, ostensibly to align it with the new Constitution, but there is the view that it is largely to fix growing tendering nightmares.

However, the Law Society of Kenya has cautioned against mutilating the law and has asked the government identify ways to address tendering loopholes and confront corruption which it says is the main issue.

Public Procurement Oversight Authority director-general Maurice Juma told the Sunday Nation in an interview that the agency and other parties have started on the review.

Mr Juma said the amendments would help plug a number of shortcomings and incorporate lessons learnt over the five years that the Procurement Act has been in force.

“A number of stakeholders’ views and input have been gathered and will inform the amendments envisaged in the new Act,” he said.

“At this point in time, views and comments gathered from stakeholders are raw proposals for amendments. The next step will be validation of these views through public consultative meetings with various stakeholders.

“It is only then that we will have specific and concrete proposed amendments that we can share with you and other interested parties,” he said when pressed for specifics.

The review is in response to a spate of court cases and controversies that continue to plague tendering for major public projects, including those in critical areas such as the forthcoming General Election, national security and infrastructure development, he said.

The push to amend the procurement law recently attracted the attention of Prime Minister Raila Odinga who said new legislation must be put in place urgently to cater for Kenya’s development needs.

The current one, he noted, was forced on Kenya by the International Monetary Fund and the World Bank.

The Sunday Nation learned that among the changes being sought by the private sector include the separation of the tender process for huge projects from the routine undertakings by ministries and public agencies.

Local suppliers also want to use the window to seek legal protection against stiff competition from established foreign firms while a stringent appeals formula is being proposed as the best way to escape prolonged litigation among querulous bidding parties.

Kenya’s Vision 2030 chief executive officer Mugo Kibati said the amendments were inescapable if the country is to move forward. “We cannot move this way, and I have made my point to the Treasury and the Public Procurement Oversight Authority,” he said.

Mr Kibati said tendering for infrastructural projects with a huge economic impact on the country should not be subject to the same kind of bureaucracy common in ministries and the same adjudicating committees involved in buying furniture and cars.

“The current law also encourages unnecessary and costly court suits and is short on the sophistication that is needed for some of the projects lined up to attain growth levels of a newly industrialised economy,” Mr Kibati said.

A new law that offers remedy to aggrieved parties but does not hold the nation at ransom or punish hard-working public servants at the behest of a few profiteers is what is desired, he said.

Kenya Publishers Association chairman Lawrence Njagi said the new law should clearly define the role of the public private partnership in procurement.

“For instance, to get value for money, we as publishers would like to be involved in the auditing of post- bidding services to ensure what was sold is actually delivered to the final consumers,” he said.

Mr Njagi said the 10 per cent country preference rule should also be operationalised to safeguard local manufacturers against undue foreign completion.

Public sensitisation

“The private sector would also like to be involved in public sensitisation because as it is now the task cannot be carried out sufficiently by the oversight authority,” he said.

But the law society says corruption and lack of capacity in public entities, rather than the flaws in the law itself, were to blame for the procurement gridlock. (READ: Public procurement a haven of graft, TI)

“There could be some justification for those advocating the amendments, but I must say that corruption remains the biggest threat, and therefore as a country we should be careful not to mutilate the stringent regulations to check the vice,” cautioned Mr Eric Mutua, the law society chairman.

“We should look at the bigger picture and demand that only minimal amendments be allowed,” he said. The chairman said many times government officials have overlooked legal counsel to engage in wheeler-dealing.

Earlier, Mr Juma reinforced the corruption claim and said it is a monster that all must be ready to face. He also said the penchant for shortcuts did not help matters.

“We have had instances where procuring entities are brought before the Public Procurement Administrative Review Board and advised to address various anomalies before they re-tender. When they re-tender, these entities ignore the advice of the Board and commit the same mistakes… In such cases, the law cannot be blamed for deliberate human failures,” he said.

On the positive, he said the high number of procurement cases and complaints filed with Public Procurement Oversight Authority and the procurement review board is proof that more people were now conversant with the procurement law and are aware of their rights.

 

Mozambique: World Bank admits blame for Beira railway


BY PAUL FAUVET,

July 27th, 2012

Maputo — The World Bank has admitted that it is largely to blame for the failure of the project to rehabilitate the Beira railway system.

The project dates back to 2003, and was intended to completely rehabilitate both the Sena line, running from Beira to the Moatize coal basin in Tete province, and the Machipanda line, from Beira to Zimbabwe.

This involved farming out management of the two lines to the Beira Railroad Company (CCFB), in which 51 per cent of the shares were held by the Indian consortium RICON (Rites and Icon International), and 49 per cent by the Mozambican port and rail company, CFM.

RICON was the dominant partner and was supposed to be in charge of the complete reconstruction of the Sena Line (which had ceased running in 1983, thanks to comprehensive sabotage by the apartheid-back Renamo rebels), and of bringing the Machipanda line up to scratch.

The World Bank was initially enthusiastic about the project, and backed it up with a loan of 104 million US dollars. The tender won by RICON was supervised by the World Bank and the award to RICON was approved by the bank. The concession contract between the government and Ricon/CCFB stated that the entire system should be rehabilitated by January 2009, and that RICON would not only manage CCFB, but would be the main contractor on rebuilding the Sena line and its bridges.

The Mozambican authorities, and CFM, soon began to sound the alarm. Ricon kept missing deadlines, and its work failed to observe technical standards. CFM and the Independent Engineer hired to assess progress both warned about these matters, but the World Bank was conspicuously silent – the Bank’s unit supervising the project took no notice of the warnings.

Ricon argued that it could not meet the January 2009 deadline for completing reconstruction of the Sena line because of the floods in the Zambezi valley in 2007 and 2008. So the government gave Ricon a further six months.

That deadline ran out, and the Sena line was still nowhere near complete. The government tried to switch the management of CCFB to CFM, but RICON used its majority on the CCFB board to block this.

When President Armando Guebuza made a state visit to India in 2010, he discussed the transfer of management power from RICON to CFM. The Indian government agreed, according to Transport Minister Paulo Zucula, but RICON still resisted. Finally, in December 2010 the Mozambican government decided to rescind the contract with RICON.

The World Bank has now issued an Implementation Completion and Results Report (ICR), dated 27 June, which is a damning indictment of the World Bank staff involved in the project. It describes the outcome of the project as “unsatisfactory”, the risk to development outcome as “substantial”, and the bank performance as “unsatisfactory”. The performance of the borrower (the Mozambican government) is described as “moderately unsatisfactory”.

The main project objectives were not remotely achieved. Thus the original goal was to have the Sena line able to carry one million tonnes of cargo a year by the end of 2009. In fact, the line was only opened to coal traffic on 8 August 2011, with freight running at 266,000 tonnes a year – just 27 per cent of the initial target 20 months late.

International traffic on the Machipanda line was supposed to rise from 480,000 tonnes a year in 2004 to 650,000 tonnes in 2009. In fact, if fell, by 2011, to 387,700 tonnes. “The potential for traffic on this line is good (and evidence by the increase in road traffic), but poor infrastructure prevents the railway from getting its share”, commented the ICR report.

All 317 kilometres of the Machipanda line were supposed to be rehabilitated. But in fact not a single kilometre was upgraded. “No rehabilitation and very little (if any) maintenance during the concession period”, remarked the report. “The Machipanda line has deteriorated further and is in fact in worse condition that at the start of the project”.

The overall reliability of the Beira rail system was supposed to improve substantially. The target was that the percentage of track under temporary restrictions should fall from 10 per cent in 2004 to two per cent in 2009. In fact, the figure rose to 16.6 per cent in 2011.

As the conflict between Ricon and the Mozambican authorities deepened, the World Bank’s Project Implementation Unit (PIU) ended up taking Ricon’s side, despite the clear evidence that it was in violation of its contractual obligations. The report admits that “The PIU eventually acted on behalf of the contractor. Despite all the documented delays, the contractor was never penalized”.

That was not the fault of the Mozambicans – the report adds that “all requests by CFM for the PIU to take action against the Contractor for poor execution of the works were ignored”.

One shocking example was that RICON was allowed to relax specifications for ballast to be used on the Sena line despite protests by both CFM and the Independent Engineer.

Furthermore, “the best skilled engineers were prematurely sent back home by the Concessionaire (CCFB), and subsequently replaced by incompetent staff, with the approval of the PIU. Despite repeated objections by the CFM and the Mozambican government, no action was taken to reverse these decisions”.

World Bank staff on the ground just covered up the problems. The report comes close to accusing them of lying to the Bank’s head office. It says “Remarkably, all of the Bank’s supervision reports during the critical stages (2005-2010) gave the project an overall rating of ‘satisfactory’ or ‘moderately satisfactory’. Despite the virulent correspondence between the parties to the contract and the persistent negative reports by the Independent Engineer, the project ratings were never revised and as a result corrective action was never taken”.

The report concludes that the Bank staff had no idea what they were doing – though it puts this in somewhat more diplomatic terms: “The Bank supervision team did not have the requisite engineering skills and competencies to make sense of the implications of the issues raised by the Independent Engineer”.

There were “significant discrepancies” between the Implementation Status Reports produced by the Bank staff and the reports from the Independent Engineer. Thus the Bank staff, in late 2007, were cheerfully forecasting that the Sena line’s first phase would open in early 2008, while at much the same time the Independent Engineer was warning that there was no chance to meet the completion deadlines.

Only when there was a change in the Bank’s supervision and management staff (in 2010) did the World Bank wake up to the seriousness of the situation. It was too late – the loan had already been disbursed.

There had been a chance to change course with the mid-term review in June 2008. By then the project had an alarming cost overrun of 50 million dollars, and construction work was around eight months behind schedule. But the Bank team excused the increase costs as “understandable”.

The ICR report notes “Rather than addressing the incompetence of the Concessionaire as a major bottleneck, the mid-term review pointed to the failure in negotiations over the coal tariff (which was a fairly recent development) and the threat of termination by he government as the main risk to Project progress. This was a missed opportunity to consider Project changes and re-direction”.

The overall message of the report is very clear – after a two year delay and cost overrun of over 50 million dollars, the key goals of the project were not met. The Sena line is not handling the expected level of traffic, and the condition of the Machipanda line is worse than before the project began.

The ICR report expresses a worry that the collapse of the CCFB concession “might trigger a negative perception of public-private partnerships in Mozambique that could reverberate to other sectors or even other countries in the region”.

The Bank is ideologically committed to public-private partnerships – but outsiders might note that the Beira Railway Project is just an extreme example of the recurrent theme in such partnerships that the public sector takes the risk while the private partner walks away with the profit.

South Africa: Texan contractor to construct tetramerisation plant


Engineering News

October 21, 2011

Texas-based engineering, procurement and construction management company S&B Engineers & Constructors has been awarded a contract by South African energy and chemicals group Sasol to construct its ethylene tetramerisation plant at Lake Charles, Louisiana.

The plant will use Sasol’s proprietary technology to convert ethylene to 1-octene and 1-hexene. This unique process was developed in Sasol’s South Africa-based research and development laboratories, and selectively produces alpha olefins required for the high-growth polymer markets.

Engineers and scientists from Sasol North America worked with an international team to design the unit, which will use the new technology on an industrial manufacturing scale.

“We are committed to providing Sasol and the local community with a safe working environment and a world-class project,” says S&B Engineers & Constructors presidentJames Slaughter Jr.

Sasol senior group executive for operations André de Ruyter reports that the project is targeted for start-up in mid-2013, and will produce 100 000 t/y of combined 1-octene and 1-hexene.

With current production of over 350 000 t/y, Sasol is a major producer of comonomer range alpha olefins. The higher olefins 1-octene and 1-hexene are used as comonomers in the manufacture of linear low-density polyethylene, high-density poly- ethylene and elastomers.

Further, the products impart elasticity and strength to plastic used in consumer products such as food packaging, bags, toys, automotive interiors and power cable coatings.

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