The Ministry of Energy’s decision to single-source IPG to supply 1.4 million tonnes of crude oil for the next two years puts Zambia in a very precarious situation, says Transparency International Zambia. After abruptly cancelling Gunvor’s contract to supply co-mingled oil for Indeni Petroleum Refinery, energy permanent secretary Brigadier General Emeldah Chola announced that Independent Petroleum Group (IPG) had been single-sourced for the contract which sources close to the deal say is worth US$1.3 billion.
Brig Gen Chola said the ministry had received authority from the Zambia Public Procurement Authority (ZPPA) to single-source the Kuwait-based company for the tender that has always been subject of competitive bidding. “We had to put in measures immediately to fill the gap of Gunvor,” said Brig Gen Chola after alleging that Gunvor had on a number of occasions been guilty of supplying Zambia with higher contents of organic chloride outside the specifications of the contract. “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.”
But TIZ president Lee Habasonda said he was concerned that the government single-sourced oil procurement from IPG. “From our point of view, single-sourcing is generally bad practice in procurement because it carries connotations of corruption and back deals,” Habasonda said in an interview. “It is unacceptable and must not be the norm. Clearly, this deal puts government in a very precarious position. We think that great care has to be taken to ensure that such a procurement approach does not become a cue for other government departments to adopt. It is for this reason that TIZ insists on competitive tendering and the removal of any monopolistic tendencies in our procurement system.” He also challenged the government to explain why it single-sourced the procurement of oil when the process was supposed to be open and competitive.
“Is it due to tight market conditions where only IPG can provide the oil? Or are there any security considerations that do not need to be known? Or are the IPG the only known supplier who can meet the technical specifications? This appears unlikely considering that another company has been terminated,” Habasonda said. “Should Zambians start smelling a rat? These questions need answers and clarification from government before they offer such a huge contract through single sourcing. Our government needs to rigorously review our purchasing strategies to ensure that this sort of procurement does not happen. It is bad practice. We expect every effort to be made to ensure that the standards of conduct outlined in the ZPPA guidelines are respected in all business engagements by the government.”
He said single-sourcing was prone to corruption. “On this score, we urge government to avoid single-sourcing altogether and give proper justification in cases where single-sourcing is done,” said Habasonda. “This is in order to avoid speculation about corruption in the procurement of goods and services. TIZ notes that contract award and implementation decisions should be fair and impartial. It is our considered view that public funds should not be used to provide favours to specific companies. We believe that contractors should be selected on the basis of their qualifications and the technical and financial merits of their offers. Indeed there should be equal treatment of all bids, including equal provision of information, deadline-setting and confidentiality.”