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Row over Zesa US$3.9m tender



A TECHNOLOGY company has dragged the Procurement Regulatory Authority of Zimbabwe (Praz) to court, compelling the regulator to investigate a US$3.9 million contract issued by the Zimbabwe Electricity Transmission and Distribution Company (ZETDC) on the grounds that it constitutes unnecessary public expenditure.


Denallare Technologies, the applicant in the case, was in 2012 awarded a tender by the 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.

Praz is the first respondent in the matter, while ZETDC, a subsidiary of the Zimbabwe Electricity Supply Authority is the second respondent.

The 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.

“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 April 2022 . . .”

The system is helping ZETDC to collect 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 the 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 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 exercises 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.

“By way of a letter dated 25 March 2022, the 1st respondent acknowledged receipt of the applicant’s letter and undertook to engage the procuring entity citing the alleged needless procurement of a new system when the current upgraded system is now on new hardware which the second respondent recently purchased for this upgrade, after years of advice, leading to financial prejudice on the procuring entity and nation.”

The applicant wrote a follow up letter to Praz on 22 April 2022 aftewhich the authority wrote to ZETDC on 6 May asking for responses by 11 May. Praz highlighted the issues raised by Denallare were serious.

Praz informed ZETDC that it was keen to ensure the matter is addressed in line with its mandate to control and regulate public procurement and to ensure the procurement is effected in a manner “that is fair, honest, cost effective and competitive”.

The ZETDC did not respond but instead signed a contract with a winning bidder, in the same tender process.

The applicant engaged Praz but no response was offered for a long time, resulting in Denallare engaging the ZETDC directly. ZETDC lawyers then wrote to the company on 29 June announcing they had assumed agency for the company.

On 4 July, Praz wrote to Denallare arguing that the complaint was “not of a procurement nature but more of policy issues pertaining to technical issues best determined by the end users who are the procuring entities”.

Through the letter Praz effectively refused to investigate the ZETDC.

ZETDC lawyers on 6 July wrote and echoed the same sentiments, stating that the complaint  was a formal challenge to a procurement process which was undertaken and concluded, and therefore refused to comment.

On 12 July, Praz wrote to ZETDC saying a challenge had been lodged by the applicant in terms of section 73 of the Procurement Act and requested for the second respondent to respond.

Denallare however said, following advice from its legal practitioners, the company realised that it was misled by the letter, given that section 73 does not apply to the applicant and is not the nature of the request that was being made to Praz.

“In any event, by the time that this letter was written, the first respondent would have been aware that the applicant was not a bidder as envisaged by the Act and the 14 day period to mount such a challenge lapsed after the winning bidder was announced,” the applicant said.

“I submit that this letter is an act of misconduct on the part of the first respondent which sought to redirect and confuse the applicant, instead of employing a procedure provided in terms of Section 93 of the Act, which is more applicable in the current circumstances where an investigation of a procuring entity is warranted.”

Denallare wants the High Court to order Praz to conduct an investigation into the tender proceedings of 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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