Zesa breaks law in Sakunda deal

State-owned power utility, Zesa Holdings, has admitted to awarding a two-year long multi-million (US) dollar contract for the supply of electricity to fuel and logistics firm, Sakunda Holdings, in 2016 without issuing a formal tender, as required by law.

Alternatively,Zesa should have obtained a special waiver, as provided by law, from the state procurement regulatory authority before proceeding to award the multi-million dollar tender .

The power utility made the self-admission to breaking standing rules and regulations while appearing before parliamentary portfolio committee on public accounts.

Sakunda Holdings, which has strong links to businessman, Kuda Tagwireyi, charged US15,45 cents per kilowatt hour (kWh) while the Government was to chip in with a subsidy, which never came.

The deal, which was to run for about two years, was valued roughly at US$250 million. The Dema diesel power plant had installed capacity to generate about 200 megawatts (MW).

When power generation was curtailed at Kariba, the country’s generation capacity fell to between 700MW and 850MW while demand peaked at 2 200MW, especially during winter.

Notably, Tagwireyi is believed to have strong ties to powerful individuals within corridors of power, which leads many observers to believe this to have played a big role in it landing the tender.

Zesa reportedly signed the power supply contract without following due procedure with the fuel and logistics firm after a directive from the Ministry of Energy and Power Development.

A decision had been taken though by the Government to procure emergency power, after the drought in 2016 curtailed output at Kariba South hydro plant, to forego tendering as required by law.

Output at Kariba South, a 750 megawatt power facility then and Zimbabwe’s largest source of power, had dropped to around 30 percent due to depleted water levels caused by drought.

But what remains puzzling is the company’s decision to contract for the power from the Dema diesel plant without the special waiver to skip state procurement rules.

The special waiver to forego the tender process should have come from the then State Procurement Board (SPB) SPB (renamed Procurement Regulatory Authority of Zimbabwe).

Executive chairman, Sydney Gata, who had not yet returned to his current position, said Sakunda was engaged following a directive from the Ministry of Energy and Power Development.

Dr Gata stated that the power utility went on and awarded the contract for power supply to Sakunda even though its engineers and lawyers had provided an adverse report of the contract.

TheZesa executive chairman revealed that Sakunda later attempted to sell the diesel power plant, supplied by Aggreko, to the power utility for US$66 billion, which Zesa declined.

But he pointed out that he was yet to see an accounting officer for a state entity with the courage to decline a directive from the Government minister if responsible for that portfolio.

Secretary for Energy and Power Gloria Magombo, who was not yet in her position, said the Government in fact had a committee to run with the project of the needed emergency power.

She said Zesa was aware of the need to follow procedures, but the Government promised to get the special waiver for the (project) to be expedited and Zesa kept reminding it to no avail.

Eng Magombo, however, noted that the power utility sent several reminders to PRAZ on the need and requirement to provide a waiver for Zesa to obtain a special waiver on tendering.

“The waiver for the procurement of power from Dema Diesel power plant did not come through . . . The secretary for energy and power development at that time was Mr (Partson Mbiriri),” she said.

Eng Magombo revealed the executive chairman of the state procurement regulator at the time the Dema power supply contract was awarded to Sakunda by the late Charles Kuwaza.

She said Zesa did not own the plant and the agreement with Sakunda was only for purchase of power, adding given the high cost of diesel now they did not have any more appetite for diesel plant power.

Further, Eng Magombo said new projects at Hwange, Kariba and renewables would fill any power supply gaps, and diesel power from the Dema facility was no longer a priority for Zesa.

Sakunda started supplying the power from July 10, 2016 and unilaterally stopped on July 10, 2017 citing challenges in the procurement of diesel that was required for the power plant.-ebusinessweekly.co.zw