NetOne, Huawei in US$290 million tender row

State Procurement Board dragged to court

Government-owned mobile phone operator, NetOne and Chinese firm Huawei Technologies Co Ltd are at the centre of a US$290 million tender row that has seen a local information technology and telecommunications investor dragging the State Procurement Board (SPB) to the administrative court for allegedly awarding a tender to the integrated Chinese mobile telecommunication conglomerate without following laid out procedures.

By Chris Muronzi

South African-based local businessman Tafadzwa Muguti has sued SPB and NetOne at the administrative court to compel the two entities to issue a statement explaining the grounds and circumstances they used to justify the procurement method adopted for the awarding of a contract to Huawei in violation of sections of the Procurement Act.

Businessdigest’s investigations show that the SPB queried a US$298 million telecoms equipment deal for 2 000 base stations between NetOne and Huawei Technologies.

The equipment would enable NetOne to upgrade equipment as well as roll out new base station sites.

Investigations show that the SPB expressed inflation of price concerns to Huawei Technologies, which saw the Chinese firm initially lowering costs of the tender to US$254 million, before eventually cutting them down US$218 million.

Sources say the SPB is puzzled and suspicious of how Huawei Technologies ended up trimming off US$80 million from its initial quotation of US$298 million for the same equipment.

The development has raised suspicions the equipment could have been overvalued by the Chinese telecommunications group.

The new equipment will ensure NetOne provides world-class broadband services on platforms like Long Term Evolution.

NetOne is one of Zimbabwe’s licensed GSM mobile network operators.

The other three are Econet, Telecel and TelOne. Only NetOne, Econet and Telecel are operational with TelOne still looking for a funding partner.

Muguti through his lawyers — Antonio & Dzvetero Legal Practitioners — cited the SPB, NetOne, Huawei Zimbabwe and the Anti-Corruption Commission Zimbabwe as the first, second, third and fourth respondents respectively.

Muguti, through his local company Secure Dynamix Zimbabwe (Pvt) Ltd, opposed the set down methods in sections 31 and 32 of the Procurement Act [Chapter 22:14].

According to his founding affidavit, Muguti is seeking the setting aside of the SPB’s decision to approve and award Netone’s equipment upgrade tender to Huawei Technologies, should they fail to issue a statement on how they arrived at the decision to award the tender.

Muguti wants the Anti-Corruption Commission compelled to investigate the manner in which Netone contracted Huawei to supply the equipment and the procedure the SPB followed in awarding the tender.

“Applicant’s company is an Information Communication Technology (ICT) provider which offers high technological information security, risk management solutions and telecommunications solutions. It has a legitimate expectation of participating in procurement tender proceedings conducted by first respondent for services that it has the capacity of providing. Second respondent is the only state-run mobile telecommunications service provider. Applicant company, like any other local telecommunications company, anticipates and expects to benefit through forming partnerships and entering into contracts with second respondent given the opportunity and capacity,” Muguti’s affidavit reads.

“Applicant company has a legitimate expectation of participating in procurement proceedings conducted by first respondent on behalf of second respondent or any other entity for services that applicant has the capacity to provide.”

Muguti said the more than US$200 million project was forwarded to the SPB in its capacity as a procurement entity as set out in the Procurement Act and approved without a public tender process as enunciated in sections 31 and 32 of the Procurement Act.

He said the SPB was obliged to act in a fair and transparent manner and ensure that all state bodies or state owned institutions conform to the Procurement Act and create a fair and transparent environment between the state and the private sector.

“It is applicant’s contention that this is only a tip of the ice-berg, which full ice-berg can only be exposed with the assistance of the fourth respondent whose main task is to combat corruption but seems to be doing nothing towards that goal in so far as it relates to the first, second and third respondents.It is submitted that by failing to go for public tender, applicant was denied an opportunity to do business,” Muguti’s affidavit reads.

“It is further submitted that if at all, the second respondent or the first respondent acting on behalf of the former adopted a method of procurement other than the method provided for in Sections 31 and 32 as envisaged in Section 30(1) of the Procurement Act then these respondents are compelled to give a statement of the grounds and circumstances on which they relied to justify the adoption of that
method as opposed to the set down method.”

Muguti is also challenging the SPB’s decision to approve and award the project contract to Huawei on the grounds that the decision was tainted with irregularity as the procurement body and NetOne failed to produce a statement in terms of the Procurement Act to the businessman justifying their adoption of a method of procurement different from the ones set out in the Procurement Act.