Africa's Public Procurement & Entrepreneurship Research Initiative – APPERI



Zambia: ‘Review oil procurement’

Zambia Daily Mail


May 6th, 2013

THE Economics Association of Zambia (EAZ) has advised Government to revise the oil procurement process by making it more transparent and efficient.
Last week, Government increased the price of petrol and diesel by KR1.75 (K1, 750) per litre and KR1.63 (K1, 630) litre respectively while kerosene has been adjusted upward by KR1.68 (K1, 680). But, EAZ president Isaac Ngoma said fuel, being a key factor in production and delivery of goods has a significant bearing on the cost structure of consumer prices. Mr Ngoma said there is need to curtail middle-men in the procurement process of for the commodity to be bought at a reasonable price.

“EAZ is of the view that the oil procurement process must be revised to make it more transparent and efficient so that we can procure the product at a good price from credible sources without middle men being involved,” he said.

Mr Ngoma said this in a press response in Lusaka recently. He said the association stands to support economically sound measures that may seem to hurt the nation in the short-term but have pronounced benefits in the long-run.
He said Government has explained the rationale behind the increase, thus the removal of the subsidy which has been in place for a long time.

“We all must know that such subsidies are unsustainable for a small economy like ours and has for a long time imposed significant pressure on the treasury.
The meager resources available are much needed to meet other social needs like in health and education,” he said. Mr Ngoma, however, said due to the raise in fuel prices there is an anticipated increase in the prices of goods and services while the cost of transport will directly affect enterprises and the travelling public.

Mr Ngoma said ultimately, the effect will impact on the inflation rate as price adjustments are inevitable.

Zambia: Witness testifies against Dora

Zambia Daily Mail


July 13th, 2012

FORMER minister of Communications Transport Dora Siliya issued instructions to halt the contract for the supply, delivery, installation and commissioning of Zambia air traffic management surveillance radar system awarded to Thales Air Systems of South Africa , a State witness has testified.
Former Zambia Public Procurement Authority (ZPPA) director-general David Kapitolo said Siliya instructed the then permanent secretary Eustern Mambwe to halt the process and retender the duly awarded contract because of alleged corruption. Mr Kapitolo however said the only person who can make variations for the cancellation of the tender awarded by the Central Tender Committee (CTC) is the minister of Finance, who is the chairperson of the CTC and the variations should be done through a statutory instrument.

He was testifying in a case in which Siliya, who is MMD Petauke Central member of Parliament, is charged with two counts of abuse of authority of office, contrary to the Laws of Zambia.The tender for supply, delivery, installation and commissioning of a Zambia Air Traffic Management Surveillance Radar System was for Kenneth Kaunda and Harry Mwaanga Nkumbula International airports.

“I received a letter which was not directed to me but to Ministry of Communications and Transport permanent secretary Eustern Mambwe from the minister asking him [Dr Mambwe] to halt the tender and retender the process because the best evaluated bidder, Thales Air Systems, was not a manufacturer,” he said.

Mr Kapitolo said the procurement process and tender awarded to Thales Air Systems of South Africa was conducted in accordance with the ZPPA rules, up to the selection of the best evaluation bidder and notification but Siliya interjected. He said Selex Systemi Integrati was not among the bidders who submitted their documents for the tender of the radars because their bidding documents were rejected for being delivered late. Mr Kapitolo said he received a letter from Dr Mambwe, seeking the cancellation of the tender awarded by the CTC but he advised that the contract cannot be cancelled by an individual. He said he replied to Dr Mambwe’s letter and advised him that he cannot ask the CTC to cancel the tender because the manufacturer who authorised Thales Air Systems to bid was a reputable institution capable of making the radars.

Mr Kapitolo said unfortunately his letter to Dr Mwambwe was leaked to the media, forcing then President Rupiah Banda to set up a tribunal to investigate the matter. He said after the tribunal’s verdict which cleared Siliya of abusing her office, his contract of employment was terminated.
Mr Kapitolo also said the ZPPA received an anonymous letter alleging that the awarding of a contract to Thales Air Systems was marred by corruption and it should be halted. He said after investigations, it was revealed that the allegations contained in the anonymous letter were a ploy to halt the procurement process so that it could be redone and allow Selex Systemi Integrati to be part of the bidding process.
Mr Kapitolo said the permanent secretary is the purchaser and buyer of any ministry.

It is alleged that Siliya between February 20, 2008 and April 20, 2009 in Lusaka, employed as Minister of Communications and Transport, abused the authority of her office, by directing the cancellation of a duly awarded tender. The tender was for the supply, delivery, installation and commissioning of a radar system to Thales Air Systems South Africa, whose implementation was frustrated. This act was prejudicial to the rights or interests of the Government of the Republic of Zambia. Particulars of the second offence are that during the same period, in breach of laid down procedure, Siliya did accept a purportedly free offer from Selex Systemi Integrati for the repair of a Radar Head at Lusaka International Airport, as a result of which government actually paid K1, 943, 932, 360, an act prejudicial to the rights or interests of the Government of the Republic of Zambia.
The matter will come up today for continued hearing.

Zambia short-lists 11 banks for Eurobond role


By Tosin Sulaiman
April 23, 2012

LONDON, April 23 (Reuters) – Zambia has issued requests for proposals to 11 international banks seeking to act as book runners for its debut $500 million Eurobond, a government agency official said on Monday.

Goldman Sachs, BNP Paribas, Standard Chartered and Deutsche Bank were among the banks short-listed from an initial 16 that submitted expressions of interest, an official at the Zambia Public Procurement Authority, who asked not to be named, told Reuters.

There has been strong appetite for African debt and the last such issue from the region – a debut $500 million, 10-year Eurobond from Namibia launched in October – was heavily oversubscribed with an initial coupon of 5.5 percent. It is now yielding 4.95 percent.

The limited supply from African sovereigns has ensured that debut issues are eagerly anticipated, with Nigeria’s $500 million 10-year Eurobond last year attracting heavy demand.

The tender closes on April 27 and it would take a minimum of three weeks to evaluate the bids, the official said. So far, eight banks had confirmed their participation.

“Last week, we had eight confirmations from the short-listed bidders that they will take part in the tender,” he said.

The agency has also issued requests for proposals to two law firms, Clifford Chance and White & Case, seeking a role as legal advisers, he added.

The government of Africa’s number one copper producer announced plans to issue a Eurobond in November when it unveiled its first budget after an upset election victory two months earlier.

In February, tenders were invited for two book runners to act as joint lead managers, to assist in determining the size and pricing of the issue and coordinate road shows.

The official said the size of the issue had been confirmed at $500 million.

The other short-listed banks were Citigroup, Absa Capital/Barclays Capital, UBS, HSBC, JP Morgan, Standard Bank and Credit Suisse .

Proceeds from the Eurobond are earmarked for upgrading Zambia’s dilapidated infrastructure – spending that will create jobs and go down well in rural areas where President Michael Sata is seeking to boost his support.

However, investors may be wary after rating agency Fitch said in early March that it was revising the country’s rating outlook to negative from stable, citing concerns about the direction of economic policy in the southern African state.

It said Zambia’s recent decision to reverse a privatisation deal could undermine property rights, while planned reforms of the mining and banking sectors could negatively impact investment and consequently macro-economic stability.

Alarm bells were subsequently raised by the suspension of the political party status of the main opposition party because it had not been paying its annual registration fees.

“Even if the decision is overturned by the courts, Fitch highlights again the risks associated with sending a negative message on matters relating to economic policy, property rights and respect for the rule of law,” Fitch said. (Reporting by Tosin Sulaiman, editing by Ed Stoddard, Ron Askew).

The Winter Kabimba – Led Mission of Inquiry Into the Energy Regulation Board


By Mr. Brown Chibale Kapika

April 22, 2012

The Kabimba led Commission over the Energy Regulation Board Investigations involving more than 2 trillion kwacha oil procurement embezzled by named former government officials was the best and brave commission of inquiry Zambia has ever had since independence.

This Kabimba – led Commission of Inquiry came out with a very strong conclusion and a warning message to the Nation. It was not a witch hunting, but a real statement containing real facts including amounts of figure in millions, Contracts signed, Tender numbers, Names of Suppliers or Companies, Dates, Cargos, and all names of former government officials involved in this scandal.

However, I, as President of Adedo Zamucano and on behalf of Zambian People, recommend Mr. Kabimba and his group who sacrifice their time on this national duty for a job well done. I also thank President Sata for his courageous step he took to appoint Mr. Kabimba to head the commission of Energy Regulation Board Investigation…Read more

By Mr. Brown Chibale Kapika (BCK)

President for Adedo Zamucano Political Party – Zambia

Ten foreign firms bid to supply Zambia oil

March 30, 2012

* Current supplier Glencore among bidders

* 12 for separate diesel, petrol supply tender

(Reuters) – Ten foreign companies, including Glencore Energy UK Ltd, have tendered to supply oil to Zambia for a period of two years starting this year, the public procurement agency said on Friday.

The oil should be configured to Zambia’s 24,000 barrels-per-day Indeni refinery, which does not process pure crude oil.

Zambia in February invited tenders for the supply of 1.4 million tonnes of oil after the expiry of a contract with Glencore under a two-year arrangement from March 2010.

Hazel Zulu, the Zambia Public Procurement Agency spokeswoman said Mercury Energy Trading (SA), Agipol Africa Limited, Gunvor (SA) and Crown Hill Investments Limited had also put in bids.

Others are KenolKobil Limited, Trafigura PTE Limited, Vitol SA, Independent Petroleum Group Company of Kuwait and Addax Energy SA, she said…Read more.

TIZ urges probe on blacklisted company’s Itezhi-tezhi contract

The Post Newspapers Zambia

By Kabanda Chulu & Bright Mukwasa
March 20th, 2012
TIZ has challenged the government to establish how a French company blacklisted by the World Bank for corruption got a contract to supply equipment worth K135 billion for the Itezhi-tezhi power project.

The World Bank has blacklisted and fined two subsidiaries of Alstom SA, a French engineering company, after the companies allegedly offered a K781 million bribe to an entity controlled by a former senior government official (not named) for consultancy services for a World Bank-financed power-rehabilitation project in Zambia in 2002.

The Alstom subsidiaries, Alstom Hydro France and Alstom Network Schweiz AG in Switzerland, will pay K50.1 billion in restitution and be blocked from bidding on World Bank contracts for up to three years.

Commenting on the matter yesterday, Transparency International Zambia (TIZ) president Reuben Lifuka said it was shocking that in 2011, the MMD government went ahead and awarded Alstom a contract to provide turbines and generators worth K135 billion for the 120-megawatt Itezhi-tezhi hydroelectric project.

“We wonder what sort of due diligence was done given the many investigations that this company and its subsidiaries are facing in a number of jurisdictions. It is absolutely necessary that a procurement audit of this particularly contract is conducted by government, with the involvement of all necessary law enforcement agencies, especially the Anti Corruption Commission. It is our expectation that the Zambian government, through the Zambia Public Procurement Authority, will equally blacklist this company from participating in any future contracts,” Lifuka said.

“We further demand that the Zambian government through the Anti Corruption Commission should immediately commence investigation against the former senior government official who received the bribe that has landed Alstom in this situation of debarment. Clearly, the action of the World Bank is a good beginning but the Zambian authorities should play their role and bring this official to book.”

He advised government to seize all proceeds of crime from the official in question in order as a deterrent to all public officers engaged in public procurements.

“It is time that as a country we do everything possible to bring to an end these criminal acts of corruption. The PF government should pursue all those that were involved in this case and bring them to book, regardless of their standing in society,” Lifuka said.

“We also demand that the World Bank clearly stipulates how the K50.1 billion restitution fee will be administered specifically for the Zambian situation. It is our considered opinion that these funds should go towards compensating Zambia for the damage caused by this act of corruption by the two Alstom subsidiaries. It is evident that the bribery paid out is a cost that the Zambian government has had to pay in terms of the loans obtained for the Zambia Power Rehabilitation Project.”

He further challenged the European Investment Bank (EIB) and the African Development Bank to equally apply the debarment measures against Alstom.

“We are aware that under the Zambia Power Rehabilitation Project, Alstom subsidiaries were involved in different aspects of the rehabilitation contracts for Victoria Falls Power Station, Kariba North Bank Power Station and Kafue Gorge Hydro Power Station and government obtained credit for this project from various funding entities, including the World Bank,
EIB, AfDB and Development Bank of Southern Africa. So it makes sense that all these entities effect the blacklisting of the two Alstom subsidiaries for the same misconduct,” said Lifuka.

Zambia: Inefficiency, expensive financing leads to high fuel cost

Times of Zambia

By Davies M.M Chanda,

October 31, 2011

THE Wynter Kabimba commission of inquiry on the Energy Regulation Board (ERB) has heard that Zambia has the highest cost of fuel in the mainland Southern African Development Community (SADC) regional bloc because of procurement inefficiency and an expensive financing arrangement.

The Zambia Association of Manufacturers (ZAM), in its written submission before the commission has proposed that Government should rationalise the tax regime for both crude and finished products by lowering them.

According to a written submission presented to the commission by the Zambia Association of Manufacturers vice-president Steve Mwansa, the price of diesel in 2008 for Botswana was US1.19, Malawi US$0.96, Mozambique US$1.05, Namibia US$1.04, South Africa 1.04, Swaziland US$0.99, Tanzania US$1.05 while the cost in Zambia was about US$1.48.

The submission made available to the Times yesterday state that Government should also issue permits to oil marketing companies to supply areas according to their geographical location such as Nacala development corridor supplying Eastern Province while addressing alternative routes such as Angola and Mozambique.

Mr Mwansa said with good practices as recommended by ZAM, the country’s cost of fuel could reduce and estimated 19 per cent for petrol while diesel price would drop by 17 per cent and that Kerosene would sale at 21 per cent less than the current price.

ZAM cited poor feedstock cargo formulation, lack of adequate national reserves, inefficient feedstock processing and underdeveloped infrastructure for the importation of the finished products. The association also stated that the taxation system was the highest within the mainland SADC member states and that Government levies, duties and other taxes were higher in Zambia compared to other countries. ZAM has since called for a more transparent procurement system for crude oil and comingled petroleum which should also reduce supply chain costs.

There was also a call for balancing the reduction in tax on fuel with the increased collections from other sectors such as mining. The tax in Botswana, Malawi, Mozambique, Namibia, South Africa, Swaziland and Tanzania ranges from 0.06 to 0.44 per cent while in Zambia, it stands at 0.55 per cent. The commission was constituted by President Michael Sata last month to establish what was causing the cost of fuel to remain higher than the rest of the region and establish bottlenecks in the procurement system.

Mr Mwansa said there was need to invest in preventive maintenance for the Tanzania-Zambia oil pipeline to reduce on the losses and that ERB percentage fees should be reduced. The commission is expected to hold its sittings today at the Mulungushi International Conference in Lusaka before moving to Ndola on the Copperbelt Province where sittings will take place at the council chambers.

Zambia: Govt single-sourced procurement of oil in 2009 and 2010 – Kalumiana

The Post

By Gift Chanda

October 18, 2011

ENERGY director Oscar Kalumiana has revealed that the MMD government single-sourced an international company to rehabilitate oil reserve tanks in all the provincial headquarters.

The company, Dalbit International Limited, was exposed by The Post as having had links with State House shortly before it was selected for the supply of oil to the country.

And Kalumiana, the energy director at the Ministry of Energy, failed to give substantial reasons why the government single-sourced the procurement of oil in 2009 and 2010 during the Indeni Oil Refinery planned shutdown.

Appearing before the energy tribunal called to look into alleged corrupt practices in the energy sector chaired by PF secretary general Wynter Kabimba, Kalumiana said the previous government had single-sourced Dalbit international Limited, a petroleum company which has its headquarters in Mauritius and specialises in the sale and distribution of Petroleum Products in East Africa and the Great Lakes Region, to rehabilitate the nine oil strategic tanks in provincial headquarters.

The company was contracted to refurbish the nine strategic tanks without following the Zambia Public Procurement Act and the tender procedures.

Kalumiana said the company was single-sourced last year on principle that they had done a “good job” when the government had first single-sourced it to rehabilitate three oil tanks on the Copperbelt in 2007.

Kalumiana was responding to a question on how many companies had been awarded contracts for the supply of oil in the last five years.

TAZAMA told the ministry that we would have a problem if we did not do rehabilitate the three terminal tanks in Ndola, that was tank number one for petrol, tank number three for diesel and tank number nine also for diesel. And on account of that there was a dilemma because actually government didn’t have the money,” he said.

“So there was actually an offer by Dalbit to actually do the financing and then be paid later. That is how that project started. Dalbit finished the three tanks at the terminal and we got a very good report from TAZAMA in terms of the workmanship. The work was done very well. It was on that reason that when there was need to do the provincial tanks…we gave the tender to Dalbit. It was a direct tender.”

He said the direct bid was approved by both the Zambia Procurement Authority (ZPPA) and the Attorney General.

“The cost for the three tanks in Ndola was US $2.8 million and the government didn’t have this money,” Kalumiana said.

Earlier, the commission took Kalumiana to task on the government’s decision to single-source the procurement of fuel during the planned shutdowns of Indeni in 2009 and 2010.

According to the law, a direct tender is only applicable in special cases.

The Post exposé in 2009 revealed that an official from Dalbit Petroleum, was in the country for negotiations and the government provided him with an aide-de-camp (ADC) and was chauffeur driven in a black Mercedes Benz belonging to the government.

Dalbit Petroleum Limited is a privately-owned company incorporated under the Companies Act Cap.486 of the laws of Kenya. The company is licensed to procure and market petroleum products in the domestic Kenyan market and for export to the neighbouring Great Lakes region in Africa.

Zambia: Sata reverses bank sale, says state house stinks with graft

PHOTO| AFP Zambia’s new President Michael Sata (right) reacts as he is congratulated by former President Rupiah Banda during his swearing-in ceremony at the Supreme  Court in Lusaka, on September 23, 2011.

PHOTO| AFP Zambia’s new President Michael Sata (right) reacts as he is congratulated by former President Rupiah Banda during his swearing-in ceremony at the Supreme Court in Lusaka, on September 23, 2011.

Posted  Monday, October 3  2011 at  20:27

Zambia’s President Michael Sata today reversed the previous Government’s sale of a privately-owned bank to South Africa’s FirstRand, dissolved several parastatal boards and revealed that the nation, including State House, was “stinking with corruption”.

Speaking at State House after he swore in permanent secretaries and other senior Government officials, Mr Sata, who was elected two weeks ago, cancelled the Rupiah Banda-administration’s sale of Zambian-owned Finance Bank to South Africa’s FirstRand for $5.4 million.

“I have been doing a search [on] the so-called sale of Finance Bank, there isn’t even any document for sale. Therefore, I am instructing the Ministry of Finance to take the bank back to the owners of the bank, immediately,” President Sata said in a verbal decree.

The Banda-administration sold Finance Bank mid last month despite public disapproval. Mr Sata had promised during campaign that he would reserve the sale.

President Sata also dissolved, with immediate effect, the boards of the Zambia Revenue Authority (ZRA), state-run power utility – Zesco, the National Pension Scheme Authority (NAPSA).

Before his election, he had accused the three institutions of graft.

The President also said he had retired the former managing Director of Zesco, Mr Ernest Mupwaya in the public interest  and reinstated Mr Cyprian Chitundu who was previously the Managing Director but was ‘‘dismissed unfairly.”

The President also sacked Banda-appointed police chief, Francis Kabonde, and replaced him with Dr Martin Malama.

“The police have to help us sweep; there is so much dirty including this office where I am, there is so much corruption. So much corruption that this country stinks and that is why people cannot get what they want,” said President Sata, 74.

“Zambia is so dirty, even my own office, some of the people who are supposed to be guarding me they even benefited from corruption,” he said.

He vowed to fight corruption.

“I don’t need any corrupt money for my campaign or for my re-election or PF re-election,” said President Sata, adding that he wants his Government to serve Zambians not him as an individual.

The Zambian leader dismissed all 72 district commissioners that were appointed by the previous Government, saying they were politicians, and ordered them to immediately vacate their offices and houses.

We cannot have civil service positions given to political parties, he said. “I have therefore fired all the district commissioners and appointed civil servants to take over from them,” said President Sata.

He also abolished several Government positions.

The new leader called for mass investment in road construction countrywide.

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