Chama behind single sourcing of new oil supplier

Chama behind single sourcing of new oil supplier

Independent Petroleum Group (IPG) of Kuwait, the firm that the PF government has corruptly single sourced to supply oil has subcontracted two firms, one controlled by PF Secretary General Davies Chama.

The Watchdog understands that Chama prevailed on the ministry to single source IPG after receiving colossal sums of USA Dollars and after making IPG ‘sign’ an agreement to subcontract Avon, a company linked to him.

IPG, which does not seem to have the capacity to supply the required oil has also subcontracted another new company to supply part of the oil.  We shall avail the details of the new company once investigations are concluded. In these contracts and subcontracts, money is exchanging hands at the expense of Zambians.

Two weeks ago, the PF government unilaterally cancelled the contract it had with Gunvor Oil Group, and replaced Gunvor with the Independent Petroleum Group (IPG) of Kuwait without subjecting the new contract to tender as required by law and ethics.

Energy permanent secretary Emeldah Chola claims that single sourcing is allowed under the PF regime.

She claimed that the Zambia Public Procurement Authority (ZPPA) gave the Ministry of Energy “a no objection” to single-source IPG and all the procurement processes were followed. “Go to ZPPA; we went to ZPPA and they gave us a no objection and all the procurement process was followed,” said Brig Gen Chola. “We had to put in place measures immediately to fill the gap of Gunvor. So, we had to find a company to single-source and it is also one of the measures that is allowed within the procurement method; it’s not that it’s outside the procurement method.”

IPG was once contracted by the Zambian government to supply oil but the result was disastrous as that is the period Zambia experienced the worst shortages of oil, and this poor performance by IPG contributed to former president Rupiah Banda’s failure to be re-elected.

The last and only time IPG was successful was in 2008 when the Zambian government awarded it a $1,2-billion crude oil deal to supply over 1.4 million tons of oil following an open tender where five other companies bid.

However, due to IPG’s poor performance during the contract period, when this contract expired, the Zambia government rejected IPG’s application to renew or extend the contract.

Instead, on March 2010, the Zambia government awarded a $1-billion contract to supply 1,4-million tons of petroleum feedstock over a two-year period,  to London-based Glencore Energy.
This was despite the fact that Kuwait’s Independent Petroleum Group (IPG) was among the companies that bid. Other companies that had tendered for the contract were Lukoil International Trading and Supply Company (LITASCO) of Russia, Vitol SA, Trafigura SA, Addax Energy SA and Kenya’s Gulf Energy.

In 2012 when the contract awarded to Glencore was about to expire, Independent Petroleum Group (IPG) again submitted a bid to supply 1.4 million tonnes of petroleum feedstock to Indeni Petroleum Refinery over two years. The Bid was rejected once more. The contract was instead awarded to Gunvor, which was among the other 10 bidders.

In 2014, Independent Petroleum Group once more tried to win the contract but the bid was thrown out.

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