Maravi

Govt wants to change crude oil suppliers

Govt wants to change crude oil suppliers
By Kabanda Chulu and Chibaula Silwamba
Thu 26 Nov. 2009, 04:01 CAT

GOVERNMENT is intending to use the Zambia Public Procurement Authority (ZPPA) in a bid-rigging exercise for the supply and delivery of 1.4 million metric tonnes of crude oil in favour of a Russian company which energy minister Kenneth Konga has allegedly negotiated with.

But ZPPA director general Samuel Chibuye on Monday said making changes to the tender document is a normal procedure.

Well-placed government sources revealed that the US $1.4 billion two-year contract to supply and deliver 1,440,000 metric tonnes of comingled petroleum feedstock would not be transparent because the government, through Konga, has already selected Lukoil International Trading and Supply Company (LITASCO) as a preferred bidder hence the ongoing bidding process being done by the ZPPA would just be a rubber stamp procedure.

The sources disclosed that the government directed the ZPPA to design tender evaluations and specifications that could only be met by LITASCO and that the first cargo delivery was scheduled by January 1, 2010 and yet bids would close on December 18, 2009.

“Last week Hon Konga was in Nigeria and Tanzania on an alleged private visit where he allegedly met officials from this company and it is like they have finalised everything so government wants to bid-rig in favour of LITASCO,” the source disclosed.

“In this process, the ZPPA will be used to rubber stamp and try to legitimise the whole process. Imagine the bids will close on 18th December 2009 and two weeks later (1st January 2010), a successful bidder will have to supply the first cargo or shipment, meaning that the ZPPA will have no time to evaluate bids that will qualify to the next stage, so it is like everything has been staged-managed.”

Konga could not be reached for comment because he is reportedly out of the country on a private visit to India and United Arab Emirates.

The two-year contract to supply and deliver comingled petroleum feedstock was awarded to the Independent Petroleum Group (IPG) of Kuwait but is coming to an end next month, hence the need to invite expressions of interest to all prospective bidders. LITASCO participated in the last bid but lost to IPG.

Another well-placed government source disclosed that the Ministry of Energy submitted before ZPPA a tender document inviting bidders but there were efforts to doctor the same document in an effort to eliminate competition.

“This is meant to source a preferred supplier of feedstock, in this case LITASCO. The changes that have been made to the original tender document prepared by the Ministry of Energy and Water Development are: (1) bidders must own or time charter in excess of 30 oil tankers at any given time; (2) the bidder must own or operate a refinery capacity in excess of 1 million barrels per day; (3) bidders must produce crude oil in excess of 1 million barrels per day and (4) bidders must trade in excess of 2 million of crude oil per month,” the source said.

“The above conditions are aimed at eliminating potential competitors who could otherwise supply the requirements for Zambia. All these efforts are aimed at eliminating all competition and are stage-managed to give this contract to LITASCO.”

But Chibuye on Monday said ZPPA had received some correspondence from other bidders, without mentioning their names, who complained that the conditions were too difficult, hence ZPPA and the Ministry of Energy and Water Development were looking at those concerns to find a level playing field.

“The changes are not final,” Chibuye said. “We have also received some correspondence from other bidders who are basically saying that we need to revise some of the conditions because they are too onerous and that is a normal procedure. Bidders are free to complain and make changes. On the basis of those letters we received from bidders, we do normally liaise with the ministry so that we can make certain changes.”

Asked about the concerns on the four changes and after the four amended conditions were read to him, Chibuye responded: “Correct! That is what I am saying. We have received letters from other bidders who are saying those conditions are too onerous, they conditions will be too difficult for some of them. So we are trying to level the playing field. That is what they requested and we have no problems with that.”

He, however, said ZPPA had to involve the Ministry of Energy and Water Development in revising the conditions.

“We can't do it on our own, we have to liaise with the users which are the ministry so that at the end of the day we agree on the level that we are going to use. If they are too onerous, obviously we have to take that into account,” Chibuye explained. “Sometimes we are accused of giving business to smalltownfields, so it's a delicate balancing act. Where do you draw the line? So those are the issues we are discussing with the ministry right now.”

Asked about the concern that the tender document was amended to include the four conditions aimed at disadvantaging other bidders to pave way for LITASCO to get the contract, Chibuye said that was not true.

“No! No! That is not the issue because usually what should happen is this that the bidders, what has happened is exactly what is the normal process. When the bidder buys the document, in fact, they are free to inspect the document before they buy but even when they buy, it's a bulky document. Some of them don't have the time or the expertise to inspect but when they came across those issues they raise them with both us and as well as the ministry. Our duty is to consider those. We don't normally waive them off and say, 'look! We can't change.' Those are not cast in stones,” Chibuye said. “So we are within the period within which those changes or those communications with the bidders can be made and that is what we are doing right now.”

Asked about State House's alleged links to LITASCO and its suspected efforts to influence the tender procedures, Chibuye said he did not know anything about that.

“I don't know. No! No! At the end of the day what we want to do is transparent and credible tender process,” said Chibuye. “At the end of the day, people will be able to see and that is why we are saying when people complain, our job is to listen and see if those complaints are genuine and if they are, then we make the changes as necessary and that is

Labels: FUEL, KENNETH KONGA, LITASCO, OIL, OMCs, PROCUREMENT SYSTEMS, ZPPA

posted by MrK @ 11:45 AM