Golden Sibanda Business Reporter—
Munyati Power Station will have its electricity generation capacity restored to 100 megawatts after Indian firm, Jaguar Overseas Limited (JOL) and its local partner were awarded the engineering procurement tender to refurbish the plant. Jaguar Overseas, backed by its local partner Intratrek Zimbabwe Limited, was awarded the rehabilitation tender at an EPC price of $113 million excluding taxes, as the efforts to solve Zimbabwe’s debilitating electricity woes gather pace.
The State Procurement Board finalised the tender last Thursday to facilitate the upgrading of the Munyati Power Station. The outdated power plant is currently generating 19MW. Zimbabwe faces critical power shortage with generation averaging 900MW against national peak period demand of 2 200MW. The situation has been worsened by reduction of output at Kariba due to concerns on the drastic fall in the dam’s water levels.
In a complex three envelope tender process that closed in August 2014 the stringent tender process required, among other conditions, the bidding consortium to be led by a company with more than five years experience in similar projects. The tender required a robust balance sheet and annual turnover in excess of $50 million for the past five consecutive years and in addition to competitive commercial (price) proposal, winning bidders were required to meet a wide scope of works.
These included replacing 15 existing boilers with modern technology, refurbishing 2 x50MW steam turbines, overhaul of cooling towers and water treatment plant, carrying civil works, dredging and rehabilitating a weir on Munyati River for water supply. Out of 72 foreign and four local firms that attended the compulsory site visit, only seven bids were eventually submitted.
The successful bids were Helcraw Electrical (Zimbabwe), State Nuclear Power Plant Design (China), China National Technical Import Export Corporation, Shadong Electrical (China), Local Partner Transfrontier Investments Zimbabwe, China Gezhouba Group Corporation, Pito Investments (Zimbabwe) and Jaguar Overseas and its local partner Intratrek Zimbabwe.
The first round of technical and funding compliance required bids that were responsive to a high threshold score after a panel adjudication. In addition to traceable and realistic funding submissions, an exhaustive technical checklist was required to demonstrate an ability to re-power the 60-year-old Munyati Thermal Power Station.
This stage resulted in five bids failing to attain the 80 percent mark required to proceed to the commercial envelope round, leaving only two technically and funding compliant bids vying for the tender.
Having been awarded the tender for re-powering Harare Power Station tender last year, Jaguar Overseas was able to leverage on its knowledge of Zimbabwean thermal power stations to present a competitive bid that complied with all specifications of the tender.
Also supported by renowned global suppliers of original high quality power plant equipment Jaguar Overseas beat stiff competition from the only other technically compliant bid priced at $149 million from China Gezhouba Group Corporation Ltd of China. According to sources close to the developments, Jaguar Overseas’ bid had initially hit a snag after the accounting officer raised concerns at the 11th hour relating to the Indian firm’s perceived delay in concluding financial closure for Harare Power Station.
On that basis the accounting officer requested permission to negotiate with the other technically compliant bidder, China Gezhouba, to negotiate their price downwards and match Jaguar Overseas’ price.
The concerns were, however, dismissed by the SPB as “irrational and illegal” on the basis that the accounting officer had already adjudged that the funding bid for Munyati was sound and this was unrelated to any issues regarding the Harare Power Station project bid. As such the concerns were deemed baseless and proposed solution equated to negotiating with other bidders while the tender process was still in motion.
The overriding principle used in this case is captured in section 31(1) (m) of the Procurement Act, which states that procuring entities shall accept whichever valid tender offering the lowest price. The request for proposal is required to categorically define the criteria and procedures by which successful bidders will be determined.
Jaguar Overseas is a leading Indian EPC contractor with a fast growing footprint on over three continents and 52 countries. The company’s track record in Africa in particular is outstanding with projects completed in over 40 countries over the past 10 years and boasting turnovers of more than $400 Million annually.
Contacted for comment, JOL owner Mr Manas Agrawal said “We are humbled to receive yet another opportunity to assist Zimbabwe in achieving self sufficiency in the energy sector. We undertake to have this project up and running in the quickest possible time”
Efforts to get comment from Intratrek Zimbabwe managing director of Mr Wicknell Chivayo were fruitless at time of going to print as he is said to be on a business trip in New York, but Intratrek’s board executive chairman, Mr Wilson Manase said “In line with our slogan of value creation through market leadership, we are leading the way in alleviating Zimbabwe’s energy crisis under Zimasset and the 10 Point Plan for Economic growth.
Our smart partnership with Jaguar Overseas Limited provides a platform for synergies, technology transfer and employment creation. Abundant energy is one of the key deliverables of Zim Asset for 2018 and the current crisis is an albatross on economic recovery. “We will only grow as a nation when indigenous Zimbabweans accept responsibility for our duty to promote economic development and provide home grown solutions to our own problems”.
Government has on several occasions encouraged the local business community to seize the numerous opportunities presented by the ongoing national infrastructure rehabilitation initiatives to familiarize themselves with procurement regulations some of which are tailored to the advantage of Indigenous Zimbabweans who want to participate in national projects.
Some of the Government’s policy positions favouring locals include a 10 percent price advantage for local bidders, leeway to partner with foreign technical partners and flexible bid bond conditions. In the event of the tender disputes, regulations provide recourse to disgruntled bidders and interested parties who have 21 days after award to institute legal procedures at the administrative court.
Sources at SPB said considering that a request for proposal (RFP) costs only $10, after publication of the tender in the national press for 14 consecutive days, it is disappointing that the level of participation by local firms has been limited to a few players.
“There are no entry barriers to tender participation by locals, who have the luxury of partnering, technically, with experienced foreign companies. Companies can also participate in as many tenders as they wish, as there is no limit to the number of tenders a company can win” said the source who preferred not to be named.
Testimony to this is the fact that Sino Hydro recently won two major consecutive awards, Kariba South extension at 570 million dollars and Hwange extension at $1,2 billion dollars. “The Procurement Laws and regulations of Zimbabwe have been crafted to empower Zimbabweans but to our surprise, its mainly foreign companies that are reaping the benefits,” the source added.