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Reports on tender for supply of diesel to Zambia reveal weaknesses

Reports on tender for supply of diesel to Zambia reveal weaknesses
Written by Chibaula Silwamba
Saturday, January 24, 2009 8:43:34 AM

TWO evaluation reports on the tender for the supply and delivery of diesel to Zambia have revealed serious weaknesses for potential suppliers - Dalbit Petroleum Limited and Energy Trading Group - whom the Ministry of Energy is trying to use to bring the commodity.

And the records have revealed that Dalbit Petroleum Limited of Kenya participated in the tendering process, although it was unsuccessful.

According to the evaluation report and re-evaluation report compiled this month and obtained by The Post in Lusaka, during the tendering process Energy Trading Group presented a trading license valid up to July 2007 and their profile did not indicate how much volume they were able to supply.

The report further revealed that despite Dalbit Petroleum Limited having more than five years experience in the supply and delivery of petroleum products, most of its supply and delivery was for relatively small quantities.

It revealed that Dalbit Petroleum did not indicate ability to mobilise rail tank wagons and did not clearly outline the key roles for the staff as requested in the bidding document.

Despite these weaknesses, the Ministry of Energy Tender Committee went ahead to recommend to the Zambia National Tender Board (ZNTB) to grant them authority to enter into negotiations with Energy Trading Group and Dalbit Petroleum Limited for each company to supply 7,500 cubic metres of diesel to Zambia.

According to the first evaluation report, in the initial bidding process, there were seven bidders that included Sabela Energy, Oryx Oil & Gas S.A, Petroneft, Independent Petroleum Group (IPG), Dalbit Petroleum Limited, Trafigura Beheer BV and Energy Trading Group.

However, Sabela Energy and Trafigura Beheer BV were eliminated at the preliminary evaluation stage because they were found to be non responsive due to their failure to submit either audited financial statements or bank statements for the past three years and the required bid security of US $1 million [about K5 billion].

During technical evaluation part one stage, IPG got 94.73 points, Oryx Oil and Gas S.A got 80.67 points, Energy Trading got 77.17 points, Petroneft got 67.12 points while Dalbit Petroleum was last with 65.24 points.

The report, therefore, revealed that Dalbit Petroleum was eliminated because it had failed to meet the 70 points cut-off line.

“The requirement at this stage was that firms needed to score a minimum of 70 points in order to qualify. Therefore, firms that scored below 70 points were eliminated. In this regard, Petroneft International Limited (bidder number three) and Dalbit Petroleum Limited (bidder number five) were non responsive due to the fact that they scored less than 70 points,” the report read in part. “It was noted that despite the bidder [Dalbit Petroleum] having more than five years experience in the supply and delivery of petroleum products, most of the supply and delivery was for relatively small quantities. Dalbit Petroleum did not indicate ability to mobilize rail tank wagons. Dalbit Petroleum did not clearly outline the key role for the staff as requested in the bidding document.”

On Energy Trading Group (ETG), the report revealed that the bidder submitted a fair project team for the assignment and it indicated ability to mobilize more than 50 by 35,000 litres road tankers.

“The bidder indicated ability to mobilize rail tank wagons,” the reported stated.

However, it noted that ETG had less than five years specific experience in supply and delivery of petroleum products.

“Their profile did not indicate how much volume they are able to supply,” the report revealed. “They (ETG) presented a trading license valid up to July 2007.”

At final analysis, the committee settled for Oryx Oil & Gas S.A and recommended the company to ZNTB to grant the Ministry of Energy authority to enter into negotiations with Oryx Oil & Gas S.A for the supply and delivery of 15,000 cubic metres of diesel per month for a period of two years.

“In the event that negotiations with Oryx are not fruitful, it is recommended that the Zambia National Tender Board grants authority to enter into negotiations with second lowest evaluated bidder which is bidder number seven, Energy Trading Group, for the supply and delivery of 15,000 cubic meters of diesel per month for a period of two years,” the report read in part.

However, a re-evaluation report done later by the same committee members revealed that the ministry's tender committee instructed the evaluation committee to re-evaluate the tender at the technical evaluation part one, taking into consideration the directives it had highlighted.

“The evaluation committee had initially carried out an evaluation of the tender for the supply and delivery of diesel on a two year running contract on 13th January, 2009 and submitted the report to the Ministry Tender Committee (MTC). The MTC held a meeting on Wednesday 15th January, 2009 to consider the report submitted by the evaluation committee,” the report read. “Upon consideration of the report, the MTC raised some concerns as indicated below: (1) there was no clear justification for allocation of points in criteria one of the technical evaluation part one. (2) The evaluation committee changed points in criteria two of the technical evaluation part one in order to make an arithmetic committee.”

The report stated that as a result of the two concerns, the MTC directed the evaluation committee to re-do its evaluation.

“The MTC directed that: (1) the evaluation committee allocates points objectively as provided for in the bid document sent to the bidders. (2) The evaluation committee retains the points as reflected in a bid document sent to the bidders,” the report stated. “The MTC, therefore, instructed that the evaluation committee re-evaluates the tender at the technical evaluation part one level taking into consideration the directives highlighted above. The representative from Energy Regulation Board did not take part in the re-evaluation due [to] other duties which had to be attended to.”

The report indicated that the committee revised the points allocated to all the bidders at technical evaluation part one. The summarised results of the technical part one were as follows; Independent Petroleum Group (IPG) 104.69 points, Energy Trading 91.15 points, Oryx Oil and Gas S.A 90.39 points, Dalbit Petroleum Limited 88.51 points and Petroneft got 77.51 points.

“The requirement at this stage was that the firms needed to score a minimum of 70 points in order to qualify. In this regard, bidder two [Oryx Oil & Gas S.A], bidder three [Petroneft], bidder four [Independent Petroleum Group], bidder five [Dalbit Petroleum Limited] and bidder seven [Energy Trading Group] were responsive due to the fact that they scored more than 70 points,” the report stated. “Consequently the bidders were evaluated further on the technical evaluation part two.”

After all the evaluation, the bidders were ranked as follows.

The reported indicated that the preferred bidder was Oryx Oil & Gas S.A, followed by Energy Trading Group, Dalbit Petroleum Limited came third, Petroneft came fourth while Independent Petroleum Group was last in fifth position.

“In view of the results of the technical and financial evaluation; (1) the [evaluation] committee concluded that Oryx Oil & Gas S.A has presented the best evaluated bid and therefore should be awarded the contract for 'the supply of 15,000 cubic meters per month of diesel to Zambia' on a two year contract,” the report stated. “It is, therefore, recommended that the Zambia National Tender Board grants authority to the Ministry of Energy and Water Development to enter into negotiations with Oryx Oil & Gas S.A for the supply and delivery of 15,000 cubic meters of diesel per month for a period of two years.

“In the event that negotiations with Oryx are not fruitful, it is recommended that the Zambia National Tender Board grants authority to the Ministry of Energy and Water Development to enter into negotiations with the second lowest evaluated bidder which is bidder number seven, Energy Trading Group, for the supply and delivery of 15,000 cubic meters of diesel per month for a period of two years.”

However, the report revealed that when adopting the recommendation, the Ministry of Energy tender committee ruled out the first choice successful bidder, Oryx Oil & Gas S.A.

“The Ministry Tender Committee (MTC) held a meeting on Monday 19th January, 2009 to consider the report by the evaluation committee. The MTC made the following observations on the recommendations made by the evaluation committee: (1) security concerns on bidder number two, Oryx Oil and Gas S.A. In view of security concerns that were raised on Oryx Oil and Gas S.A during the tender for supply of petroleum feedstock in 2007, it is not advisable to recommend the bidder for the award of the tender. There is need for the bidder to be cleared by the security wings before they can be considered for award of any tender in the petroleum subsector. Oryx Oil and Gas S.A should therefore not be considered for the award of this tender.”

The report further revealed that the MTC noted some logistics for delivery of tender quantities.

“The MTC noted that delivery of 15 million litres of diesel per month as per tender requirements translates into supply of about 15 road tankers per day. Based on the experience that the ministry has had in 2008 during the importation of 15 million litres of diesel, the company that was contacted to deliver the said quantities had problems in mobilising tankers due to the shortage of road tankers and rail tank wagons in the sub-region. It is therefore very difficult for one bidder to be able to deliver the tender quantities in view of this logistical challenge. The tender should therefore be awarded to two bidders,” the report stated.

The report disclosed that the MTC varied the recommendations made by the evaluation committee.

“It is therefore recommended that the Zambia National Tender Board grants authority to the Ministry of Energy and Water Development to enter into negotiations with the following two bidders. (1) Bidder seven - Energy Trading, which was ranked second in clause 10.4 financial evaluation, for the supply and delivery of approximately 7,500 cubic meters of diesel per month for a period of two years. (2) Bidder five - Dalbit Petroleum Limited, which was ranked third in clause 10.4 financial evaluation, for the supply and delivery of approximately 7,500 cubic meters of diesel per month for a period of two years.”

However, the report, in its strength and weakness column, maintained its initial observation that Energy Trading Group had presented a trading license valid up to July, 2007.

The report also maintained its initial observation in the earlier report that despite Dalbit Petroleum Limited having more than five years experience in the supply and delivery of petroleum products, most of the supply and delivery it did was for relatively small quantities.

“The bidder [Dalbit Petroleum Limited] did not indicate ability to mobilise rail tank wagons. The bidder did not outline the key roles for the staff as requested in the bidding document,” the report revealed.

And in a letter dated January 20, 2009, ZNTB director general David Kapitolo, energy permanent secretary Peter Mumba stated that his ministry had finished evaluating the bids for the supply and delivery of diesel and was therefore recommending to ZNTB to authorize the ministry to enter into negotiations with Energy Trading Group and Dalbit Petroleum Limited.

“Please note that the total amounts to be imported at any particular time will be determined by the amount of diesel required to supplement what is being produced from Indeni [Oil Refinery in Ndola]. In view of the apparent reduction in mining activities the monthly amount of diesel to be important may be less than the tendered 15 million litres,” stated Mumba.

There are complaints from well-placed sources within MTC that external forces are exerting power to push the ministry to unduly award Dalbit Petroleum a contract to supply diesel. The source said an official from Dalbit Petroleum was in the country and was accorded VIP treatment.

“A government Mercedes Benz was assigned to this official who was chauffeur-driven,” said the source. “He was even assigned an aide-de-camp (ADC). From this, it is easier to guess where pressure to award the contract to Dalbit is coming from.”

Labels: DIESEL, FUEL, PROCUREMENT SYSTEMS

posted by MrK @ 8:43 AM