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Politicisation of Petroleum supply to Zambia as Senior Ministry of Energy Officers arrested

Filed under: Business,Latest News |

The awarding of petroleum contracts in Zambia have over the years attracted controversies with claims of favoritism and corruption. One would however be curious to note that these allegations are often littered with political innuendos and losers crying wolf. These accusations have resurfaced with accusations that Dalbit Petroleum Limited has been favored in this process. For the interest of the Zambian people, we sought to investigate the truth on the award of fuel contracts going back six years. We were guided by the need to confirm if due process was followed and whether the Zambian people got value for money. I n 2009 Dalbit secured their first contract under the then MMD Government. It should be recalled that this was during severe shortages when the former late President Michael Sata was photographed with a jerrycan queueing to get his ration of the precious product. During this time Dalbit proved their logistics acumen and swiftly sorted out the bitting shortages in a matter of days. Our investigations revealed that Dalbit has previosly been wrongly denied contacts to supply despite having the best bid in terms of technical and financial aspects. This may have resulted to Zambian goverment, and ultimately the consumers, paying more for product on one hand while creating supply instabilities on the other. In a transparent tender process which incorporated the Anti Corruption Commission and the Office of the President (Red Brick) Dalbit fairly won tender No. TB/ORD/058/08 in 2009. this was in response to international tender No. TB/ORD/058/08 floated in the local media in September 2008 with a closing date in October 2008. The bids were opened on 17th October 2008, Dalbit offered a price of USD/MT 1267.62 against the closest bidder who had a price of of USD/MT 1281.83. Suffice to mention that the second placed best bidder did not even have the required bid Security of 1,000,000USD. Although the bid was for 15,000M3 the supply was reduced to 7,000M3. Understandably no one was sure of the capacity of Dalbit at the time and thus could not entrust them to supply the entire volume. Dalbit managed to supply with flawless logistics that overrun the supply of the competitor leading to the award of an additional Emergency Supply Contract before the Indeni Refinery shutdown of October 2009. The company was the also the best evaluated bidder for the for 2011/2012 tender in both technical and Financial aspects. However the country was shocked to learn that Trafigura that was 5th in the bid opening was awarded the contract leading to the country losing US55million. This contract, as can be recalled, generated a lot of uproar in the Nation with a cross section of people castigating the Governmnet for letting the country lose money without reason. Additionally, the tender for 2014/2015 was won and awarded to Dalbit during President Michael Sata’s regime, and again a review of the tender documents indicate this was on the basis of offering the best bid in terms of financial and technical aspects. This is the tender running to date. Reviewing the facts available to us, there is no evidence that Dalbit Petroleum has been favoured in the awarding of these contracts. In all the instances their bids have been found to the best in both financial and technical aspects. Secondly it is evident that during the periods that company has been engaged to supply the nation with fuel the country has experienced stability and constant supply as compared to shortages when other suppliers were engaged. Following the death of President Michael Sata Trafigura was hastly and irregulary single sourced on 12 November 2014 to supply diesel and petrol from January 2015 at fixed prices locked at September 2014 rates when the prices on world market were still high despite the contract stipulating that pricing be on a Month-minus-1 basis with the connivance of a named senior official at the Ministry of Energy. On discovery of this scam by alert officers at the Ministry of Finance, Trafigura resorted to holding the Government to ransom and refused to offload the product despite them having a letter of credit in their favour issued at the inflated rates. Two officers from the Ministry of Energy have since been arrested in relation to this scam. Government has ended up paying inflated prices in excess of US$3.5m on just a few days deliveries. If it was not for the alert officers in the Ministry of Finance, the amount would have been in excess of US$20million for a few months’ supply. In the meantime, in order to avert an emerging shortage, Government turned to Dalbit to step in and supply was swiftly normalised even before any payment instruments were established in their favour. Undeterred by the performance record of Dalbit, there has now emerged a smear campaign by some sections of the business community to malign the company, with some linking it to the fugitive son of former Republican President, Rupiah Banda without any substantiation. Our search at PACRA has revealed that Dalbit Petroleum Zambia Ltd was incorporated on 19th February 2008 after undergoing the registration process which started in September 2007 when the name was approved by the Registrar. We also did some due diligence on the company and reviewed their perfomance elsewhere. Dalbit Petroleum Ltd was incorporated in 2002 in Kenya and commenced expansion into the East African, Great Lakes region and Southern Sudan and Southern Africa. The company has been supplying fuel in the region for over 10 years. The company is a supplier to the United Nations organisations across Sub Saharan Africa and key manufacturing companies and major mines in the region. Besides the company is ISO certified further attesting to its sound operational systems. We have not encountered any evidence to support the allegations of corruption and favoritism while the same cannot be said about some of their competitors who have been found wanting by many courts of law across the world for unsound business practices and wantom corruption.


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