Malawi Government has silently bought an additional 4 440 metric tons of fertilisers for the 2012/13 Farm Input Subsidy Programme (Fisp) through a process that has ‘panic’ written all over it, documents show.
The additional inputs will cost an estimated $3 54 1497 (K1.2 billion), thereby increasing the Fisp budget to K41.2 billion just five months into the current financial year and at a time the Joyce Banda administration is whistling the austerity tune.
According to Ministry of Agriculture documents we have seen, the additional 4 440 metric tons would be “enough for 44 000 beneficiaries” for the 2012/2013 Fisp.
But the ministry said on Wednesday it is not aware of the issue although documents we have seen show that the ministry’s Internal Procurement Committee (IPC) met on the matter and that principal secretary Geoffrey Luhanga sought a ‘No Objection’ from the Office of Director of Public Procurement (ODPP) to facilitate the emergency purchase.
The IPC met on November 8 2012 to consider a request from Fisp coordination unit to buy the additional tonnage, according to documents.
Minutes of the IPC show that the committee decided the additional fertiliser should be supplied by Paramount Holdings, Export Trading and Sealand Investments.
Luhanga communicated the same to the ODPP at 4.30pm on November 15 2012 as an emergency in seeking for a ‘No Objection’ for the ministry to purchase the additional tons from the three firms.
In an apparent sign of panic, ministry officials made ODPP officers wait in the office for the necessary paperwork up to 19:30 hours before they could bring all documents required for a ‘No Objection’ to be processed.
Signs of more pressure are also prevalent in the ODPP internal communication which shows that director of public procurement Dye Mawindo had to give a verbal authority for the ‘No Objection’, an unusual step for the public procurement overseer.
But in a short e-mail response to our questions on Wednesday, Ministry of Agriculture’s publicist Sarah Tione said the ministry is not aware of the stated communication.
“In my consultation, I have learned that the ministry is not aware of any letter as you have mentioned. As such, it is hard to comment on speculation,” she e-mailed.
But ODPP spokesperson Mary Mbekeani acknowledged that the office gave authority for the ministry to procure the additional fertilisers.
Said Mbekeani: “We received their documents and gave them the No Objection. Justification for the need is their business.”
Our investigations so far show that in November alone, the ministry wrote ODPP twice—first seeking ‘No Objection’ for additional fertilisers and the second time seeking ‘No Objection’ to re-allocate 4 700 metric tons of NPK initially awarded to OPTICHEM.
Communication we have seen also hint that the ODPP was unhappy with the process that led to the additional fertiliser purchases.
According to a November 16 2012 loose minute from ODPP assistant director Edward Jeke to his boss Mawindo, the ministry displayed disorganisation in the matter it processed the procurement.
He said prior to the actual submission of the request for ‘No objection’, the ministry sent an officer at about 9:00hrs on November 15 2012 to meet the desk officer.
“….Apparently [it was] to seek advice on how they could expeditiously secure a No Objection on the procurement whose full documentation was still being compiled,” reads the minute in part.
Later in the day at 16:40hrs, the ministry submitted what surprised the ODPP officer.
“It [the submission] was in the form of a single paper stating the current position of deliveries on the 2012 Fisp contracts and ending with a request for this office to grant the No Objection for them to award contracts for additional quantities based on IPC recommendations which were yet to be submitted,” Jeke wrote.
“I waited until 19:30 hours when the minutes arrived. My quick review of the minutes revealed lack of adequate information for a conclusive assessment to be made,” he said.
The ministry was only able to submit full information a day later.
According to the documents, ODPP also felt that the IPC decision in the matter was compromised by the participation in decision-making of the controlling officer, in this case Luhanga.
“I also wish to register my fears as to the independence of the [procuring entity’s] IPC in making these decisions. I noted with concern that the controlling officer was fully participating in making the award decisions,” he concluded.
Initially, government said it would need 150 000 tons of fertiliser for the 2012/2013 Fisp at the cost of K40 billion to reach 1.5 million poor households.
At no point was there a mention of the 44 400 additional beneficiaries to necessitate the 4 440 fertiliser tonnage more.
At a recent Common Approach to Budget Support (Cabs) review meeting in October, Finance Minister Ken Lipenga only hinted at an increase in the Fisp budget due to devaluation of the Malawi kwacha and a rising inflation rate.
One of the donors supporting Fisp, Norway, confirmed on Thursday that it has been informed of the additional purchases.
Norwegian Ambassador Eidhammer Asbjørn said in an e-mail response that the ministry explained “that there was need to adjust some of the previous estimates, which would mean additional beneficiaries”.
ODPP is also perplexed at the way the ministry ‘allocates’ contracts, according to the documents.
In reviewing a request for the ministry to re-allocate the 4 700 metric tons OPTCHEM has failed to supply, Jeke discovered that the ministry “has a very serious disease in the way they award contracts”.
“The disease is that of ‘allocating business’. Seriously, ‘allocation’ does not exist in a tender competition,” he said in the November 26 2012 loose minute.
The ministry had allocated 12 000 metric tons of NPK to OPTICHEM who have failed to complete the total supply “due to other constraints.”
The ministry’s IPC allocated the 4 700 of the quantity OPTICHEM has failed to deliver to Sealand (1 500 metric tons), Export trading (1008), Transglobe (1 000) and Paramount (1 192).
Sealand wanted to supply at a cost of $825, Export trading $844, Transglobe $845 while Paramount at $828.
“These prices were obtained through a competitive tender process and the principle is very clear that ‘the lowest evaluated bidder gets it all,” said Jeke.
Based on tender procedures, Jeke, therefore, thinks Sealand should have been automatically given the whole contract.
The contract for re-allocated fertiliser is worth $3 877 500 (about K1.3 billion).