Yona F. Maro
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- Nov 2, 2006
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Tanzania Imefungwa Magori Mengi Ndio Kosa Hapo Imefungwa Magoli 6 Na Ndio Timu Iliyofungwa Magori Mengi Katika Kundi Hili Kwahiyo Tatizo Liko Hapo
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TANZANIA Electric Supply Company (Tanesco) has asked 2.43 million US dollars (about 3.06bn/-) payment in penalties from Dowans Holdings, following the firm's failure to fulfil its contractual obligations.
Dowans Holdings entered into an agreement with Tanesco to supply and install gas based generation plants at Ubungo that were supposed to become operational on February 2. Tanesco Managing Director Dr Idris Rashidi said in a statement yesterday that the amount required was cumulative penalties Dowans owes the power utility firm following its failure to attain Commercial Operation Date (COD).
Dr Rashidi said Dowans Holdings only achieved COD yesterday, instead of February 2. "This means it achieved COD 234 days behind the schedule," he said. He said the penalty was in line with the agreement between the two parties which imposed a daily penalty of 10,000 US dollars as liquidated damages if COD is not achieved as agreed. "The penalty is calculated from the date when the plant had to be commissioned up to the actual date when the plant is commissioned," said the Tanesco boss, adding that he will request the government to deduct the amount from monthly capacity charges, starting this month.
Tanesco entered into Emergency Power Purchase Agreement with M/S Richmond Development Company of USA on June 23, last year, in which the latter undertook to supply and install 100 MW gas based generation plants at Ubungo.
The contract was among measures taken by the government and Tanesco to mitigate the poor generation condition which faced the country due to poor rains. However, in December last year, M/S Richmond sought TANESCO's consent to assign the contract to another company, namely M/S Dowans Holdings of United Arab Emirates, which assumed all contractual obligations and responsibilities vested upon M/S Richmond.
M/S Dowans however failed to commission the 100 MW plant in accordance with the terms of the Agreement for reasons that were not TANESCO's.
THISDAY REPORTER said:FRESH details have come to light about the highly-controversial Richmond power generation deal of last year, including the apparent interference by at least one top government official in the tender award process for the multi-million dollar contract.
It has already been established that a task force appointed by Prime Pinister Edward Lowassa awarded the lucrative contract to Richmond Development Company despite the US-based firm having already been disqualified by the Tanzania Electric Supply Company (TANESCO).
And now a new report by the state-run Public Procurement Regulatory Authority (PPRA) has revealed that there was remarkable meddling in the contract negotiations by higher authorities in government, apparently to ensure that the contract eventually went to Richmond.
The PPRA report says in black-and-white that there was a clear interference with the tendering procedures in the awarding of the tender for the supply of 100 megawatts of thermal plant electricity to the national grid.
These latest revelations have been made at least five months since the Prevention and Combating of Corruption Bureau (PCCB) announced that its own investigation had found the Richmond deal to be clean and devoid of corruption.
In its 2007 report on the procurement, contract and performance audit of TANESCO, the PPRA states that the awarding of the contract to Richmond Development Company LLC was not consistent with the public procurement procedures.
According to the public procurement watchdog, higher authorities forced TANESCO to enter into the contract with Richmond even after the power utility firm itself, in its role as the competent authority in such matters, rejected the US-registered company as being incompetent.
The report says TANESCOs tender board, in meetings held in late March of last year, had already identified eight bidders plus five new firms in the power rental business after a re-tendering process.
But on April 4, 2006, the chairman of the tender board received instructions from the (TANESCO) board of directors in response to directives from the government to re-call all eight bidders and get clarifications for the submitted bids with the purpose of finding a possible bidder that could deliver thermal plants successfully, says the report.
It adds: This was a clear interference with the tendering procedures and was not consistent with the public procurement procedures.
The tender board meeting minutes of April 10, 2006 read in part: �at 16:20hours while the discussions were proceeding, a notice was brought to the tender board by the company secretary that the (TANESCO) board chairman has directed to suspend the tender process with immediate effect until further notice.
It is now understood that the tender board subsequently recommended that TANESCO should not be part of a contract arising out of a procurement process it had not seen through.
But apparently, this was overruled and the state-run power utility firm eventually ended up signing the contract with Richmond.
The report says TANESCO was ordered to sign the contract with Richmond although it (TANESCO) had initially established conclusively that Richmond was non-responsive to the bid requirements and was unable to deliver the services required.
As subsequent developments show, TANESCOs worst fears seemingly came true as Richmond fell far behind on its power production schedule and the company was eventually deemed to have failed to deliver on its side of the contract.
In December last year, a new company, Dowans Holdings S.A of the United Arab Emirates, came into the picture by inheriting Richmonds contract with TANESCO under equally murky circumstances. But by the time Dowans was ready to generate power (Wednesday last week), it was already a staggering 243 days behind schedule.
TANESCO Managing Director Dr Idris Rashid announced that Dowans must now pay a penalty of $2,430,000 (over 3bn/-) to the government for the delay, an amount accumulated from a daily fine of $10,000 since February 2 this year when the UAE company was supposed to start delivering power.
However, in its latest report, the PPRA expresses its own doubts on whether the government will actually be able to enforce payment of this penalty. There is no agreement between the parties as to how the amount will be claimed from Dowans Holdings, it notes.
The Richmond power generation fiasco will undoubtedly go down as one of the biggest debacles in the annals of the countrys post-independence history, raising a public outcry that prompted the PCCB to declare that it had started an official investigation into possible corruption in the contracting process.
But surprisingly, PCCB Director General Edward Hosea made a public announcement last May that the investigation had found the deal to be clean; an assertion that now appears seriously discredited by the new details emerging from the PPRA report.
Richmond: The hidden truth revealed
The Ministry of Energy and Minerals recalled bid documents submitted by all the eight bidders from TANESCO, processed them itself ? and eventually came up with Richmond Development Company LLC
-New report outlines 'clear interference' by 'higher authorities' in how the tender was awarded
THISDAY REPORTER
Dar es Salaam
FRESH details have come to light about the highly-controversial Richmond power generation deal of last year, including the apparent interference by at least one top government official in the tender award process for the multi-million dollar contract.
It has already been established that a task force appointed by Prime Pinister Edward Lowassa awarded the lucrative contract to Richmond Development Company despite the US-based firm having already been disqualified by the Tanzania Electric Supply Company (TANESCO).
And now a new report by the state-run Public Procurement Regulatory Authority (PPRA) has revealed that there was remarkable meddling in the contract negotiations by 'higher authorities' in government, apparently to ensure that the contract eventually went to Richmond.
The PPRA report says in black-and-white that there was ''a clear interference with the tendering procedures'' in the awarding of the tender for the supply of 100 megawatts of thermal plant electricity to the national grid.
These latest revelations have been made at least five months since the Prevention and Combating of Corruption Bureau (PCCB) announced that its own investigation had found the Richmond deal to be clean and devoid of corruption.
In its 2007 report on the procurement, contract and performance audit of TANESCO, the PPRA states that the awarding of the contract to Richmond Development Company LLC was ''not consistent with the public procurement procedures.''
According to the public procurement watchdog, 'higher authorities' forced TANESCO to enter into the contract with Richmond even after the power utility firm itself, in its role as the competent authority in such matters, rejected the US-registered company as being incompetent.
The report says TANESCO's tender board, in meetings held in late March of last year, had already identified eight bidders plus five new firms in the power rental business after a re-tendering process.
''But on April 4, 2006, the chairman of the tender board received instructions from the (TANESCO) board of directors in response to directives from the government to re-call all eight bidders and get clarifications for the submitted bids with the purpose of finding a possible bidder that could deliver thermal plants successfully,'' says the report.
It adds: ''This was a clear interference with the tendering procedures and was not consistent with the public procurement procedures.''
The tender board meeting minutes of April 10, 2006 read in part: ''?at 16:20hours while the discussions were proceeding, a notice was brought to the tender board by the company secretary that the (TANESCO) board chairman has directed to suspend the tender process with immediate effect until further notice.''
It is now understood that the tender board subsequently recommended that TANESCO should not be part of a contract arising out of a procurement process it had not seen through.
But apparently, this was overruled and the state-run power utility firm eventually ended up signing the contract with Richmond.
The report says TANESCO was ordered to sign the contract with Richmond although ''it (TANESCO) had initially established conclusively that Richmond was non-responsive to the bid requirements and was unable to deliver the services required.''
As subsequent developments show, TANESCO's worst fears seemingly came true as Richmond fell far behind on its power production schedule and the company was eventually deemed to have failed to deliver on its side of the contract.
In December last year, a new company, Dowans Holdings S.A of the United Arab Emirates, came into the picture by inheriting Richmond's contract with TANESCO under equally murky circumstances. But by the time Dowans was ready to generate power (Wednesday last week), it was already a staggering 243 days behind schedule.
TANESCO Managing Director Dr Idris Rashid announced that Dowans must now pay a penalty of $2,430,000 (over 3bn/-) to the government for the delay, an amount accumulated from a daily fine of $10,000 since February 2 this year when the UAE company was supposed to start delivering power.
However, in its latest report, the PPRA expresses its own doubts on whether the government will actually be able to enforce payment of this penalty. ''There is no agreement between the parties as to how the amount will be claimed from Dowans Holdings,'' it notes.
The Richmond power generation fiasco will undoubtedly go down as one of the biggest debacles in the annals of the country's post-independence history, raising a public outcry that prompted the PCCB to declare that it had started an official investigation into possible corruption in the contracting process.
But surprisingly, PCCB Director General Edward Hosea made a public announcement last May that the investigation had found the deal to be clean; an assertion that now appears seriously discredited by the new details emerging from the PPRA report.