New monetary policy derails road works

GOVERNMENT could be forced into a supplementary budget if its plan to rehabilitate the country's dilapidated road infrastructure is to come to fruition, Transport minister Joel Biggie Matiza has said.

Matiza was responding to questions from NewsDay after it emerged that the Procurement Regulatory Authority of Zimbabwe (PRAZ) had approved proposals from the ministry to hike charges of equipment and other materials required in road construction.

In a letter to the deputy director (administration) in the Transport ministry, the PRAZ special procurement oversight committee (SPOC) said it had, after a meeting, agreed to review upwards the rates for bitumen, tar prime and emulsions as well as equipment hire charges, key requirements in road works.

"Accordingly, the authority, through SPOC round robin resolution number 0010, having reviewed the accounting officer's submissions in terms of section 54 (10) of the PPDPA Act, resolved that: There was no objections to the accounting officer's proposal to revise upwards the proposed rates of bitumen, tar prime and emulsions and equipment," part of the letter read.

"According to the new charges, tipper trucks hire charges have gone up from $2,65 for 0-1km to $4,14, an increase of about 60%. Bitumen distributors charges increased from $2 000/day to $3 120/day."

The same letter shows that the cost of a material known as bitumen 70/100 has gone up from $1,30 to $4, an increase of over 200%.

All other equipment and supplies used in road construction have gone up by similar percentages following the new monetary policy, as well as the introduction of the 2% electronic transactional tax in October last year.

Bitumen penetration grade 70/100 is a standard penetration bitumen used for paving and mainly suitable for road construction to produce asphalt pavements with superior properties.

Matiza said while the increases may not necessarily mean higher costs of road rehabilitation and construction, the fact that government had shifted its policy from the 1:1 exchange rate between the United States dollar and the local real time gross settlement (RTGS) dollar would mean that there should be movement in that direction.

"There is always a formula to pay contractors and deal with situations such as these. However, because government has changed policy regarding the exchange rate, this could mean a change in budgets," he said.

"When allocations were made last year, they were based on the 1:1 exchange rate between the RTGS dollar and US dollar. Now things have changed and adjustments upwards are necessary."

Matiza, however, said projects underway would continue.

"Nothing is going to change in terms of our projects. We will continue with all road construction and rehabilitation projects. It's a job we are determined to make sure we deliver," the Transport minister said.

Zimbabwe is struggling to deal with economic problems dating back nearly 20 years of mismanagement and a political crisis that has stuck on the country since the turn of the millennium.

President Emmerson Mnangagwa, who has projected himself as a reformer since taking over in a coup in 2017, continues to push for a "new way of doing things", including literally "biting the bullet" with regards to the structural changes in the economy.