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PRAZ advises ZETDC to tackle economic concerns



THE Procurement Regulatory Authority of Zimbabwe (Praz), which has been dragged to court to compel it to investigate a US$3.9 million tender issued by the Zimbabwe Electricity Transmission and Distribution Company (ZETDC), says the parastatal should consider the economic aspects raised by the applicant, despite the fact that the authority is opposing the application.


The applicant, Denallare Technologies, was in 2012 awarded a tender by ZETDC to design, configure and commission a pre-payment, vending and management system. The company created a prepayment platform responsible for the encryption and vending of electricity tokens which are used to load credit onto all pre-payment metres.

ZETDC however last year procured a new and expensive system under tender number ZETDC/INTER/07/2021, despite the existing system being at peak performance.

Denallare is arguing that the new tender is unnecessary public expenditure and has been engaging Praz to investigate the matter, to no avail.

In a letter, dated 28 December 2022, written by Praz chief executive officer Clever Ruswa and addressed to ZETDC managing director Howard Choga, Praz said it would oppose the application on the grounds that the matter was not a procurement issue, although it said economic matters raised should be addressed.

Praz suggested that the ministry of Energy and Power Development was best placed to handle the matter.

“We received a court application for mandamus from Denallare Technologies (PVT) Ltd t/a REMVA, regarding the tender ZETDC/INTER/07/2021. The Authority intends to oppose the application,” Ruswa said.

“The investigation being sought is outside the Authority’s mandate because of the following:
“The decision to procure is entirely up to the procuring entity.

“The matter amounts to an economic investigation regarding the utilization of a national resource, which is not a procurement issue. The matter revolves around poor financial planning and system changes, which must be referred to the appropriate ministries, not PRAZ.

“We advise the Accounting Officer that consideration must be made to the economic aspects raised by REMVA, in light of section 14 of the Public Procurement and Disposal of Public Assets Act.”

Denallare last year dragged Praz to court, compelling the regulator to investigate a US$3.9 million contract issued by ZETDC, after unsuccessfully engaging the authority over the matter several times.

“It was an expensive, time consuming and rigorous exercise to have completed the contract with the second respondent and to install the prepayment platform for it to now generate the encrypted tokens for the nation and to allow for the various metres supplied to have access to this service,” argued Denallare, in court papers filed by Gill Godlonton & Gerrans.
“The system is currently working at its peak performance and it was recently upgraded as of Aprill 2022.”

The  system is helping ZETDC to collect a revenue of over US$350 million annually in advance for the national utility, including the historic customer debt.

“As the current holder that is providing this service for the 2nd respondent and the country, it came as a surprise to the applicant that the 2nd respondent decided to go to competitive bidding process to procure a similar platform as the current, seeking to mirror the platform in a manner that would require the removal of just recently procured servers only to remove them and install new and expensive hardware from another source, to replace software and hardware that has just been upgraded to the latest technology in the sector and on brand new servers, just seven months earlier,” read the court papers.

The applicant argued that ZETDC’s decision does not comply with the objectives of the Public Procurement and Disposal of Public Assets Act (Chapter 22:23), which prefers the direct procurement method in terms of section 33, where additional services are required by a supplier and where a change of supplier would cause problems of inter-changeability or incompatibility with existing equipment.

Denallare further argued that the system that controls the encryption and vending of electricity tokens for a nation is very specialised and provided by a handful of suppliers in the world.

“The second respondent is now undertaking an exercise in excess of US$3 900 000, which is an unnecessary cost to the nation, when the current system upgrade was already done as part of an annual upgrade and maintenance which the applicant provides for the second respondent,” the company argued.

“The applicant is concerned by how the second respondent can sign contracts with a supplier with no known history in the region for this specialised software, and with the blessing of the first respondent, through their Special Procurement Oversight Committee (SPOC).”

Denallare wrote a letter to the Praz chief executive officer Clever Ruswa on 18 March 2022, informing him of the anomalies and causes for concern. The letter contained correspondence between the applicant and ZETDC from 2018 to 2022, advising ZETDC of the need to maintain its national vending system.

Through the letter, and several others afterwards, the applicant sought that Praz exercise its power in terms of section 96 of the Public Procurement and Disposal of Public Assets Act, to investigate this conduct, as well as to exercise its powers in terms of section 54 (10) (c) by suspending the ongoing process while the investigation was being undertaken.

Denallare is seeking the High Court to order Praz to conduct an investigation on the tender proceedings ZETDC/INTER07/2021 in terms of section 96 of the Public Procurement and Disposal of Public Assets Act within five days of the order being granted.

The company also wants ZETDC to be ordered to stay the tender proceedings and any acts taken pursuant to the same, pending the completion of the investigation.

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