K7.5BN water project raises eyebrows

Northern Region Water Board (NRWB) has come under the spotlight for awarding a contract price of $14.7 million (about K11 billion) to Sawa Group Limited when the bidding price was $10 million (about K7.5 billion).

The contract in question relates to the Mzimba Intergrated Urban Water and Sanitation Project, which seeks to improve access to water supply in Mzimba town.

A bid opening document dated February 10 2017 which The Nation has seen indicates that Sawa Group Limited’s total bid price for the project was $10.1 million, but the award contract disclosure published in the media at the weekend put the award contract price at $14.7 million.

NRWB has since defended the disparity between the bid price and the contract price, arguing that they followed the donor guidelines and rules to the letter in awarding the contract amount.

In a telephone interview yesterday, NRWB chief executive officer Titus Mtegha said co-financiers of the project, African Development Bank (AfDB), gave a ‘no objection’ and clearance to proceed to award the contract to Sawa Group Limited at $14.7 million.

Coming hot on the heels of the controversies surrounding the Salima-Lilongwe Water Project, the Public Accounts Committee of Parliament has demanded an explanation from the NRWB on the matter.

A source has confided in The Nation that the tender for the Mzimba Integrated Urban Water and Sanitation Project required a prequalification process which was done for submission of tender documents by February, 2017.

But the source claimed that the prequalification process was declared “null and void” and that a reevaluation of the tender was done to reject all other bids.

In the event of all other bids being rejected and only one tender succeeding, the board should have opted for a retender, the source said.

Added the source: “Since they did not, this is a clear case of conspiracy to reject all bids and award to a pre-determined company.”

Minutes of the bid opening ceremony held at NRWB head office, Kawiluwilu House, on February 10 2017, show that six bids were opened with Sogea Satom having the highest bid of $24 million while the rest ranged from $15 million to $10.3 million.

The other bidders included Jos Hansen and Soethe GmBH, Plem Construction-HE Jackson JV, Stecol Corporation, Raubex and Sawa Group Ltd.

But according to the contract award disclosure, the board opted for Sawa Group Ltd whose bid opening price was $10.1 million.

However, the disclosure published in the papers has not indicated why the award price is $14 million, $4 million more than the company’s bid, according to the bid opening minutes.

When informed about the matter, Public Accounts Committee chairperson Alekeni Menyani said it was disheartening that such practices continue to take place, especially in water boards.

He said: “This is collusion at its best. As PAC, we demand suspension of the board chief executive officer Mr Titus Mtegha until we do a public inquiry by July 2017. We also ask that Minister of Finance [Goodall Gondwe] must pronounce himself on the same since he obtained this loan.”

Menyani justified his committee’s interest on the matter, saying NRWB has obtained a loan repayable by the Malawi Government in a few years with interest.

He said: “How can they [NRWB] use taxpayers’ money to pay over 40 percent more to a contractor? This can be termed as a criminal waste of resources.”

But Mtegha produced a letter of ‘no objection’ from the co-financier, AfDB, which contributed $5 million to the $22 million project.

He also showed The Nation minutes of the Internal Procurement Committee (IPC) which he chairs, which approved that the contract be awarded to Sawa Group Ltd at $14.7 million.

He could, however, not explain how the IPC arrived at the contract award price of $14.7 million when the bid price was $4 million less.

Said Mtegha: “To get to that point, we went through a rigorous evaluation. The IPC met and got clearance from the board, then the Office of the Director of Public Procurement and then AfDB as the donor who gave a ‘no objection’.

“The ‘no objection’ came from the regional office of the AfDB and we involved the Ministry of Finance and Ministry of Agriculture, Irrigation and Water Development in the whole process.”

But when queried on why the board arrived at the award of $14.7 million, Mtegha referred The Nation to the NRWB procurement manager.

In December 2015, Parliament authorised the Ministry of Finance to borrow $14.85 million (about K8.9 billion at the time) from Organisation of Petroleum Exporting Countries (Opec) Fund for International Development (Ofid) for the project with a repayment period of 20 years.