US$100m Zesa tender scam raises stink

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Auditor-General Mildred Chiri

IRREGULAR tender procedures coupled with a lax accounting system, among other factors, have delayed the completion of the US$100,4 million prepayment and smart metering project the power utility, Zesa, rolled out, a latest report from the Auditor-General Mildred Chiri shows.

Tinashe Kairiza

Resources to roll out the smart metering project, which was meant to improve Zesa’s revenue collection system, were secured through a loan from Afreximbank and the Infrastructural Development Bank of Zimbabwe (IDBZ).

The prepayment and smart metering project, which has been mired in a corruption scandal, was initiated in 2011 by Zesa through its subsidiary the Zimbabwe Electricity Transmission and Distribution Company (ZETDC). Implementation of the project was scheduled to be completed by 2014, but was derailed owing to “inconsistencies in the payments” made to various contracted firms. Chiri’s damning audit report comes a month after three Zesa executives, namely Joshua Chifamba, Julian Chinembiri and Thokozani Dhliwayo, were arrested last month over an irregular US$35 million transaction involving Indian firm PME contracted to supply transformers.

According to the smart metering audit report, a number of companies such as Powertel, REVMA and OK Retail were unprocedurally contracted to offer various services, opening loopholes for potential misappropriation of project funds.

Chiri further stated that the ZETDC could not specifically quantify how much it had spent in financing various activities under the project.

“Documentary review of submitted responses from finance department as at September 19, 2015 indicated that ZETDC had paid a total of US$99 782 743 towards the prepayment activities, a figure which varied with the final submitted prepayment project payments by the same department as at May 20, 2016,” Chiri observed. “There were also some inconsistencies in the payments made to a company called REVMA for vending system as reported in the statements of payments on September 19, 2015. It indicated a figure of US$5 254 038 that varied with the reported figure as at May 20, 2016 amounting to US$2 506 310 which was later revised to US$10 086 338 according to the finance department report.

“Documentary review of Ministry of Energy and Power Development showed that ZETDC’s appointment of Powertel as a sole aggregator was not through a formal tender process. Even though Powertel participated in the tender for aggregatorship, it failed to win against other bidders. In addition, Powertel acted as both the aggregator as well as the vendor selling electricity tokens at its banking halls posing an unfair trading ground for other vendors. ZETDC also appointed OK Zimbabwe Limited as vendor for the pilot project and renewed its appointment during the pilot phase without going to tender.”

As part of her recommendations, Chiri noted that: “Tenders should be awarded by ZETDC based on merit rather than direct appointments to ensure better quality service and thereby achievement of the intended results.”

Chiri also noted that the smart metering system, primarily introduced to improve revenue collection, was not achieving its intended objective.

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