The PF government has once again corruptly single sourced a company whose bids have been rejected since 2010 to supply oil after suspiciously canceling an ongoing contract.
And the Watchdog is reliably informed that Gunvor Oil Group is preparing to sue the Zambian government in Zambian and International courts for breach of contract.
Last Friday, the PF government unilaterally cancelled the contract it has 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 claimed that her ministry cancelled the contract because Gunvor supplied contaminated oil. The normal procedure would have been just to tell Gunvor to take back the contaminated oil and supply good oil, especially that the alleged oil had not even reached Zambia. If Gunvor succeeds in Court, the Zambian government will be made to pay Gunvor the profit it would have made had the PF government not cancelled the contract, among other fees.
Chola said the decision to cancel the contract was made by the procurement Committee in the Ministry of Energy, which also decided to award the contract to Independent Petroleum Group (IPG) of Kuwait.
But informed sources say this is just a continuation of the ongoing corruption in the ministry and oil industry at large.
Records show that from 2010, Independent Petroleum Group (IPG) of Kuwait has been bidding to supply oil in Zambia but failing to meet requirements.
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, when this contract expired, the Zambia government rejected Independent Petroleum Group (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.
So how did Independent Petroleum Group this time ‘win’ the contract?
The answer is very simple: there were no other bidders. It was single sourced. The government did not subject the supply of oil to a normal, legally required tendering process. Instead, money exchanged hands.