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Parliament investigates US$109m dam tender scandal

by Staff reporter
03 Oct 2021 at 08:19hrs | Views
THE Zimbabwe National Water Authority (Zinwa) executive is under investigation for awarding a dodgy US$109 million Kunzvi Dam construction tender to China Nanchang Engineering, which has a shady past, ahead of other cheaper yet competitive bids.

Corruption, including industrial-scale looting mainly at the top echelons of state power and public enterprises, is rampant in the country, having found a haven in parastatals.

It not only lowers the tax-to-Gross Domestic Product ratio, but also causes long-term damage to the economy by undermining investment, increases the size and scope of the informal market, distorts tax structures and corrodes taxpayers' tax morality and compliance.

The Zinwa executive — including chief executive Taurai Maurikira — on Wednesday came under fire from MPs on Parliament's portfolio committee on Lands, Agriculture, Rural Resources, Water Development and Resettlement after failing to avail documents for the Kunzvi Dam tendering process as per the request of the committee, prior to the appearance.

The parastatal's bosses were supposed to give oral evidence on the Kunzvi Dam tendering process as well as on the controversial contract for prepaid water meters they entered into with various companies.

Zinwa ended up giving evidence on prepaid water meters only after failing to furnish the committee with required documents. The committee chairperson, Mayor Wadyajena, ordered Zinwa executives, who included  Maurikira, to avail the documents by the end of business on Wednesday.

Wadyajena said it was unfair to expect legislators to discuss the Kunzvi tendering process without having had prior access to the relevant documents.

"We can't discuss the Kunzvi Dam building tender process when we have nothing in front of us. Its unfair to honourable members, including myself, so we would rather discuss Kunzvi when you have submitted the required relevant documents," Wadyajena said.

"We sent a letter to your office requesting the submission of the Kunzvi Dam building tender process and we had assumed that by now you would have submitted the documents. We want them submitted by end of day."

China Nanchang Engineering was controversially awarded the US$109 million tender for the construction of the dam — critical to alleviating Harare's perennial water supply problems despite its shady past, hence the interest from the committee.

The Sino company had its accounts frozen by the Reserve Bank of Zimbabwe (RBZ) last year for illegal black market foreign currency trading activities.

In addition, it also seized a US$171 million dam construction tender from a competitor, China Jiangxi International and Technical Co-operation Co. Ltd, through a smash-and-grab approach.

Nanchang was taken to court in 2019 for muscling into the US$171 million Silverstroom Dam project in Mashonaland Central province outside the tender process.

The company, now mired in a new scandal over the US$108 885 000 Kunzvi Dam proposal, fought to keep its ill-gotten Silverstroom project.

The Chinese companies, Nanchang and Jiangxi, ended up resolving the tender robbery fight over Silverstroom through an out of court settlement.

The Kunzwi Dam tender was also awarded under dubious circumstances.

In the aftermath of the contentious tender, SinoHydro, which had submitted the lowest and competitive bid (US$65 523 463.61) in partnership with a local company Marmfold Engineers, raised the alarm over Nanchang's US$108 885 000 controversial winning proposal.

Subsequently, it has bitterly complained to the government, through the Office of the President and Cabinet and Agriculture ministry, about what it said was a shady process. SinoHydro believes that given its lowest bid, capacity and experience, it should have won the tender, but the project was irregularly given to Nanchang.

These revelations and details are contained in documents that were leaked to two local media organisations, including The NewsHawks.

Nanchang's US$108 885 000 bid was ranked fifth, based on costs. The lowest bid was from SinoHydro and Marmfold joint-venture at US$65 523 463; followed by Jiangxi (US$78 130 826), JR Godart (US$83 971 779) and RDAVIS Company (US$99 948 883).

This means Nanchang's bid was US$43 361 536 more than SinoHydro's lowest proposal. Drawcard submitted a bid of US$109 432 004, Multi Force Construction (US$121 286 896), Masimba Construction (US$140 191 249), Bitcon and Kuch Construction joint-venture (US$142 377 001) and Nyagui Construction (US$149 447 353).

The highest bid of US$197 139 196, almost three times that of the lowest quotation, was from Exodus and Company. The tender process raised eyebrows.

Barely two years ago, Nanchang was caught up in a tender scandal. Jiangxi, which also bid for the Kunzvi Dam project, given to Nanchang under murky circumstances, won a tender for the construction of Silverstroom Dam in 2019.

However, the government corruptly reversed that and awarded the tender to Nanchang, in violation of the bidding process and the law. The intervention smacked of brazen irregularities and corruption.

In anger, Jiangxi approached the High Court, through its lawyer Tapson Dzvetero, to fight Nanchang's robbery.

In its application, Jiangxi cited the late Agriculture minister Perrance Shiri, secretary Ringson Chitsiko, Zinwa, Nanchang, and the Pocurement Regulation Authority of Zimbabwe (Praz) as respondents.

Justice Tawanda Chitapi heard the urgent application.

Dzvetero argued that the tender reversal was illegal, as Jiangxi's bid was held to be competitive in all aspects and the most cost effective by the Praz.

Dzvetero told The NewsHawks in August that the matter was later resolved by consent order.

"Basically, the parties decided to resolve the matter outside the court because they decided not to fight government. An out of court settlement was reached and the project remained with China Nanchang," Dzvetero said.

Nanchang has another issue in its dodgy past record. Reserve Bank of Zimbabwe governor John Mangudya on 24 January 2020 issued a statement, saying an investigation by the central bank's Financial Intelligence Unit (FIU) had found that Nanchang had used its bank account "to inject millions of dollars into the parallel market in the last few days".

"The FIU has ordered the freezing of the identified account pending further analysis and is undertaking ongoing surveillance to identify more culprits involved in the parallel market transactions, particularly on the EcoCash platform," he said.

Mangudya said the RBZ would "identify and take appropriate action, in terms of the law, against any culprits involved in illicit foreign currency activities and manipulation of the foreign exchange rates".

Kunzvi Dam is located 67 kilometres north-east of Harare near Juru Growth Point in Goromonzi district in Mashonaland East province.

The project, estimated to have capacity to produce 250 000 cubic metres of water daily, is on the upper reaches of the Nyagui River.

Its dam site is approximately four kilometres upstream at the confluence of Nyagui River and the Nora River. The main purpose of the reservoir is to supply water to Harare, which has serious water problems.

The Kunzvi Dam project's cost has been speculative, with wide variations. The figures bandied about widely vary — ranging from US$65 million to over US$800 million; for the same project. Initial feasibility studies have shown cost projections going up to about US$865 million, creating room for rent-seeking and corruption.

For example, the Infrastruture Development Bank of Zimbabwe on its website says the project is estimated at US$865 million.

"The dam site is 67 kilometres north-east of the capital, near Juru Growth Point on the Nyanguvi River. The dam will have the capacity to deliver 158.4 million cubic metres of water daily. The estimated project cost is US$865 million and will be funded through Public-Private Partnership initiatives," the bank says.

"Project implementation is estimated at 60 months. In addition to supplying water to Harare and its catchment areas, the dam project will provide surrounding communities with water for irrigation. Furthermore, the city will save on treatment costs as the project is more upstream than Lake Chivero which is downstream and heavily contaminated with effluent from industries."

Construction Review Online in January last year quoted Mashonaland East Provincial Affairs minister Aplonia Munzverengwi as saying US$259 million had been allocated for the project, although the overall cost stood at US$680 million.

The Infrastructure Consortium of Africa in 2011 reported that a group of private contractors had mobilised US$370 million needed to fund the Kunzvi Dam project.

Source - The NewsHawks