Govt picks ‘corrupt’ Dalbit to supply oil

The government has awarded the contract to supply the nation’s diesel needs to Dalbit Petroleum Limited; a company Minister of Justice Wynter Kabimba claimed wanted to bribe him.

During The Assignment programme on Muvi TV recently, Kabimba revealed that Dalbit had offered him a bribe to win the oil supply contract but yesterday the Daily Nation obtained a copy of the government letter offering Dalbit the diesel supply contract although security officials have yet to clear the company

According to a letter of notification of award of contract for the supply and delivery of diesel lot 2 worth over US$387 million, the tender has been given to Dalbit Petroleum Limited of Kenya.

Dalbit was also cited by the Wynter Kabimba-led Energy Regulation Board Commission of Inquiry for irregularities which were blamed for the loss of US$2 million during the Rupiah Banda regime.

Last year Dalbit was blocked from getting the tender to supply diesel despite having the least bid price of the commodity which was at a weighted average of USD/MT 1207.43 against the second best bid from Agipol Africa which had a weighted average of USD1270.50 on allegations of impropriety.

The offer means that Zambia will pay US$1.06 per litre of diesel compared to an average of US$2.11 per litre paid to Trafigura under a contract that is still under controversy.

A letter announcing the award stated, “This is to inform all the bidders who participated in the tender for the supply and delivery of 366 million litres of diesel lot 2 that the tender has been concluded and the ministry intends to award the contract to the best evaluated bidder Dalbit Petroleum Limited of Kenya at an estimated contract sum of US$387,446,428. 80.

In accordance with sections 53, clause 2 of the Public Procurement Act No. 12 of 2008, we intend to award the contract after ten (10) working days from 16th September, 2013. As provided for in clauses 170 and 171 of the Public Procurement Regulations (Statutory Instrument No. 63 of 2011) under the PP act No. 12 of 2008, bidders seeking clarification on the ministry’s award should write to the ministry with their concerns within 10 working days from 16th September 2013,” Ministry of Mines, Energy and Water Development permanent secretary Charity Mwansa stated.

13 companies, among them Addax Energy SA, Augusta Energy, Glencore Energy UK, Galana Petroleum and Dalbit Petroleum bid for the multi-million dollar oil tender.

Other companies were Independent Petroleum Group, Mogas, Oilcom (T) Ltd, Sabeil (PTY) Limited and Sakunda Energy.

The rest are Strauss Logistics Ltd, Trafigura PTE Limited and Vitol Bahrain EC.

Last year in April, the Justice Minister Wynter Kabimba-led commission of inquiry tasked to look into the operations of the Energy Regulation Board and the oil procurement process, found that the government lost K2 trillion through corruption in the oil procurement process between 2007 and 2011.

It further said that officers in the Ministry of Energy and Water Development, the Zambia Public Procurement Authority and the Energy Regulation Board were involved in the oil corruption.

Kabimba further revealed that some of the companies that were involved in the corruption had put in bids to supply the country with oil.

The report wants action to be taken against the named officials.

“The report has further recommended that all officers who are serving in government and all contracts with irregularities that are still running be suspended to pave way for investigations,” he said.

The Commission’s key findings were that the procurement methods and tender procedures for supply of oil as outlined by the Public Procurement Act No. 12 of 2008 as read together with Finance Act of 2004, were consistently breached by the Ministry Of Energy and ZPPA through the named individuals.

The report also had established that the process of selecting suppliers for petroleum feedstock and finished products had been clearly characterised by malpractices and corruption, with an example of an initial contract awarded to Dalbit, a Kenyan petroleum Company at $2.1 million for petroleum infrastructure improvement through direct bidding that was dubiously increased to $65 million through continued extensions of the same contract to its sister company Dalbit International unlawfully, thereby government losing US$ 13.5 million.

“This is in a contract TB/SP/020/09 which was for bidding for the supply and delivery of 90 million litres of diesel and 30 million litres of petrol dated 26 January 2010. Here the Commission established that the direct bidding was done without lawful justification as stipulated by the ZPPA,” the report read in part.

The report also stated that the Ministry Of Energy contracted Dalbit International to undertake various works on petroleum-related infrastructure to the extent of $65 million when the prevailing market rates and were at $ 49.3 million; this resulted in an over-payment of US$ 15.6 million by the government to Dalbit International.

Dalbit Petroleum which came out prominently in the commission’s findings was also fraudulently awarded a contract to rehabilitate fuel tanks at Ndola Fuel Terminal under the pretext of project financing when in fact it was secured through the Strategic Reserve Fund.

“Dalbit was also awarded a contract to supply an annual value of 84 000 cubic meters of diesel on a two year running contract signed on 17 April 2009 under tender number TB/ORD/058/08 despite being more expensive than ORYX/ADDAX, which was the initial lowest bidder. The same contract volume increased to 155 000 cubic metres without lawful justification.

On the same contract number, Dalbit was allegedly overpaid an amount of US$101.4 million for the supply and delivery of finished products arising from payments made through letters of credit issued by the ministry of finance under the instructions of ministry of energy for the period May 2010 to December 2011,” the report reads.

The report further states that there was also introduction of new evaluation criteria by splitting the quantities to supply to favour Dalbit Petroleum despite the company’s lack of a proven record.

The Commission in its report stated that in a contract without a number, Dalbit Petroleum was awarded a proposed contract to refurbish fuel tanks at Ndola Fuel Terminal in March 2010 worth US$ 2.8 million through direct bidding without following tender procedures.