Zimbabwe's US$2bn highway project raises eyebrows


Former Minister of transport Obert Mpofu

LACK of transparency in the selection of the winning bidder for the multi-billion dollar Beitbridge-Masvingo-Harare-Chirundu highway dualisation project has raised fears that apart from being over-valued, the project may be awarded to an undeserving bidder.
This follows recent pronouncements by the new Transport and Infrastructure Development Minister, Joram Gumbo, that a special committee chaired by Vice President Emmerson Mnangagwa will shortly be coming up with the winner for the tender to dualise one of the busiest roads in sub-Saharan Africa.
This fast-track process is being carried outside the standard State Procurement processes.
However, the speed with which the process is moving, the secrecy surrounding the process and the rate at which the projected costs have been increasing have raised suspicion among industry players that a “winner” could have been in place before a decision was made to cancel a tender that had been given to a consortium of local contractors.
Sources said this week that some government officials with interests in the project had arm-twisted ZimHighways into withdrawing a court case in which it was fighting government over the arbitrary cancellation of its tender.
In early September, ZimHighways issued a statement in which it announced that it was withdrawing the protracted High Court case, saying it had come into an agreement with government.
“ZimHighways and the Government of Zimbabwe, through the Minister of Finance have agreed as follows: ZimHighways undertakes to withdraw the matter,” the consortium announced in a press statement co-signed by Finance Minister Patrick Chinamasa.
“The withdrawal of litigation by ZimHighways is to allow the Minister both scope and free hand to initiate and undertake negotiations for an appropriate financing model for, inter alia, the upgrading and dualisation of the Beitbridge/Harare road, free from litigation.”
The consortium said in return, government had agreed to ensure local contractors, including ZimHighways, would be sub-contracted in the project.

It remained a mystery how ZimHighways had to cut a deal with the Ministry of Finance, instead of the Ministry of Transport and Infrastructure Development.
Not surprisingly, the so-called agreement came less than a month former transport minister, Obert Mpofu, had invited local and foreign firms to submit bids for the project, in blatant disregard of the then on-going court process.
Mpofu had in November last year, told stakeholders in Victoria Falls attending a familiarisation tour of the Victoria Falls International Airport that his ministry had decided to go ahead and engage new players to work on the road regardless of what the outcome of the court challenge could be.
“We have decided to say no, we cannot wait for the court case. We need to start doing something and we have already approached a number of financiers to come on board. This is our busiest road and can’t be held back forever by a court case,” Mpofu said at the time.


Minister of transport Joram Gumbo

In 2003, government awarded ZimHighways — a consortium of 14 construction firms that included Murray & Roberts Zimbabwe (now Masimba Holdings), Costain Africa (now ZCL Holdings, which is under judicial management), Kuchi Building Construction, Tarcon, Bitumen Construction Services (Bitcon), Joina Development Company and Southland Engineers — a contract to dualise the 900-km highway at cost of US$883 million.
The project failed to take off amid accusations and counter-accusations between government and the consortium.
Government claimed the consortium had failed to prove it had the financial muscle to execute the project, while the consortium claimed that some senior government officials were demanding huge bribes to support the project.
ZimHighways also accused government of going behind its back to negotiate a separate deal with the Development Bank of Southern Africa (DBSA), which had agreed to finance the consortium’s project.
It was with the US$206 million loan from DBSA that government embarked on the Plumtree-Bulawayo-Harare-Mutare project, executed through Infralink, a joint venture special purpose vehicle (SPV) between the Zimbabwe National Road Administration (ZINARA), a government road agency, and Group Five International of South Africa.
When the Financial Gazette contacted Gumbo this week to establish the identities of the companies that had been short-listed for the job and possibly how his ministry is ensuring that everything is done above board, he declined to give any information, infact claiming that as far as he was aware, the selection process had not even started as they were still canvassing for bids from as many companies as they could get.
“No one has been short-listed for the project. We are still talking to many companies and there is really nothing for you to write about,” Gumbo said. This is despite the fact that Gumbo has been quoted in the public media twice announcing that a winner for the project would be announced shortly as three bids had been short-listed from 12 applications.
He was also quoted indicating that from the bids that had been submitted, the project would cost anything between US$1,5 billion and US$2 billion.
When the Financial Gazette tried to ask Gumbo about these reports, and how the cost could have more than doubled, he retorted: “Go and ask those people who have been saying it because I do not know what you are talking about.”
Media reports also seem to be corroborated by Gumbo’s deputy, Michael Madanha, who told the Senate on October 21 that three bids for the project had been submitted to Mnangagwa for consideration before announcement of the winner.
Mnangagwa is responsible for the infrastructure development cluster under the Zimbabwe Agenda for Sustainable Socio-Economic Transformation (Zim-Asset) economic blueprint.
Harare West legislator, Jessie Majome, said the way the project was being handled raised suspicion.
“The move startlingly breaks all the rules in the good governance and rule of law book. What on earth happened to checks and balances? Is it a trap for him (Mnangagwa) to trip on? Moreso it rides roughshod over the rigorous procedures in the Procurement Act and the principles of financial management in the Constitution. No wonder why we keep ranking low on the business competitiveness index,” she said.
Social and political commentator Rashweat Mukundu said from the history of this project, expecting transparency would be expecting too much as this was the same way mega deals signed with the Chinese and the Russians as well as the Chiadzwa diamonds had all been handled.
“The whole government tendering system by admission of the ZANU-PF government is in shambles, tainted by corruption and nepotism. Tendering has been used as a way to make easy money and the US$2 billion Beitbridge-Harare-Chirundu highway dualisation project is but one example of this crisis of transparency and accountability,” Mukundu said. “If the VP (Mnangagwa) is for transparency then he must decline this dishonourable act and instead institute a system that ensures fairness and openness in this process. Ultimately this is borrowed money which the citizens will pay back through blood and sweat.”
Questions are not being raised on this project alone.


Joseph Chinotimba

Last month, Buhera South (ZANU-PF) legislator, Joseph Chinotimba, caused deputy Speaker of the House of Assembly, Mabel Chinomona, to ask deputy Transport Minster Madanha to bring to Parliament a detailed report on the Plumtree-Bulawayo-Harare-Mutare “dualisation” project.
This was after Chinotimba insinuated that government had been cheated, demanding to know how US$206 million could have been spent on just resurfacing a road.
“What is dualisation? Is it repairing the existing road infrastructure or constructing two-way traffic lanes so that we do not have traffic crossing each other on the same road? The problem we are facing is the resurfacing of the existing roads which is not dualisation,” Chinotimba told Parliament in September.
Chinotimba’s suspicions are not new.
Sources said President Robert Mugabe had in 2012 expressed disappointment when he realised that he had been misled into believing that the US$206 million loan ZINARA had been seeking was for the dualisation of the road.
“The President was horrified that the road was being merely resurfaced instead of being dualised as had been agreed when he approved the DBSA loan. He fumed at (then transport minister Nicholas) Goche and demanded that the road be dualised with immediate effect and he made it clear that he did not care where the money would come from,” a source told the Financial Gazette.
It is not unusual for tenders on projects to be inflated and manipulated.
There was public outcry after a private investor, with political connections, claimed the dualisation of the 12-km Airport Road in Harare would cost US$80 million when 78-km of a better road had previously cost mining firm, Zimplats, about US$19 million to construct using largely the same local companies that constituted ZimHighways.
Chegutu West (ZANU-PF) legislator, Dextor Nduna, who is the chairman of the Parliamentary Portfolio Committee on Transport and Infrastructure Development, was recently reported as having benefited from an inflated tender after his firm was paid more than US$2,2 million by Chegutu Rural District Council for maintaining a gravel road, which work experts had said should have cost less than US$600 000.
Group Five, which did the Plumtree-Mutare road, is one of the several South African firms that were two years ago collectively fined US$140 million after pleading guilty to illegal and irregular behaviour that included price-fixing and collusion.

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