Escom has been offering contracts to companies not registered with the Registrar General and avoiding clearance from the Public Procurement and Disposal of Assets Authority (PPDA) by “splitting” procurement deals, Nation on Sunday reveals.
The revelations come on the heels of a series of scandals that have rocked the parastatal, including a theft of 4.2 million litres of diesel meant for generators, and misprocurement of goods worth K5 billion.
A month-long Nation on Sunday probe on how Escom is procuring goods, has revealed that the corporation is avoiding the PPDA clearance by splitting what should have been one procurement into several others, so that they are below the threshold of K10 million.
The probe also revealed that most of the companies that Electricity Supply Corporation of Malawi (Escom) engages in its procurement exercise are not registered by the Registrar General, and with the PPDA, which is a requirement in public procurement.
According to documents we have seen, between March and April this year, Escom bought D-Irons from 17 different companies—a total of over K154 million—with each firm making a deal of K9 million.
And from January to April, Escom bought bolts and nuts from 12 companies, spending over K77 million.
Our two-week random sampling search at the Registrar General’s Office has revealed that only one of the 17 companies which supplied D-Irons was registered.
And among 12 firms that supplied bolts and nuts, only two firms are registered.
In just one procurement, for example, Escom bought D-Irons worth K16 455 000 from two companies which are not registered at both the Registrar General’s Office and with the PPDA.
PPDA spokesperson Grace Thipa said under Section 39 (2) of the PPDA Act, it is an offence for any Procuring and Disposal Entities (PDEs) to artificially split procurement or disposal requirements with a view to circumvent the use of competitive methods of procurement or disposal as prescribed by the PPDA.
“Any person who contravenes this provision shall be guilty of an offence and shall, upon conviction be liable to a fine of K500 000 and imprisonment for two years.
“But since we do not have any documentation on the procurements made at Escom, we cannot competently say how the procurement process was conducted. This means we will do our own investigations on the same,” said Thipa.
Commenting on the Escom conduct of awarding contracts to companies that are not registered, she said Section 52 of the PPD Act, is clear that to be awarded a procurement contract, a bidder shall be registered.
“If an unregistered company emerges lowest evaluated bidder, it must fulfil the registration requirements before it can be awarded a public procurement contract as detailed in provisions to Section 52 of the PPD Act,” Thipa said.
Escom spokesperson Innocent Chitosi promised to respond to our questionnaire on the procurement process the institution is following, but he has not done so despite several reminders.
A highly placed source in management, however, told us that since 2016, the corporation’s Procurement Department has been acquiring goods without Escom’s Internal Procurement Committee (IPC) and PPDA approving payments.
The source said from October 2017 to March this year, Escom entered into contracts with many companies to supply goods worth K8 billion, which would be split into several procurements to remain with the PPDA threshold.
A former Escom employee corroborated the story and blamed the procurement mess on the unbundling of the institution in 2017 to create two institutions—Escom, which is responsible for distribution, and Electricity Generation Company (Egenco), which is responsible for power generation.
“During the unbundling of Escom, it was decided to restructure the Procurement Department—that it stands alone. By then, the department was under administration from the finance department,” he said.
Escom board chairperson Thom Mpinganjira in June this year told the media that the board had ordered a forensic investigation into “blatant disregard of the procurement rules and regulations sinking the firm”.
According to Mpinganjira, irregular procurement decisions left the parastatal with materials it may not use for a long time while others would become obsolete technologically.
With a K55 billion deficit hanging over its head, Escom plans to borrow K30 billion from commercial banks to finance its deficit, something that has attracted protest mainly from civil society organisations and Parliament.
In the 2016/17 fiscal year, according to an Auditor General’s report, the firm ordered goods worth K5.1 billion that were rendered useless through misprocurement.
Escom was also in the news for the wrong reason after 4.2 million litres of diesel meant for its 78 megawatts generators were stolen. n