Indian firm wins Munyati power deal

HARARE - Indian firm Jaguar Overseas Limited (JOL) has been awarded the tender to rehabilitate Munyati power station in conjunction with its local partner Intratrek Zimbabwe (Private) Limited (Intratrek).

This also comes as President Robert Mugabe’s government has sought to accelerate quite a number of energy projects — to plug a chronic 1 200 megawatt (MW) power deficit — amid signs that the country’s electricity supply situation is set to worsen with Kariba’s diminishing capacity.

In confirming their Munyati success, JOL owner 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.”

While efforts to contact his local partner and Intratrek managing director Wicknell Chivayo were fruitless as he was said to be on a business trip to New York, his executive chairman Wilson Manase said:

“In line with our motto of ‘value creation through market leadership’, we are (hoping to continue) leading the way in alleviating Zimbabwe’s energy crisis and helping the nation achieve its 10-point plan under ZimAsset. Our smart partnership with Jaguar Overseas Limited provides a platform for synergies, technology transfer and employment creation,” he said.

“As you would know, abundant energy is one of the key deliverables… by 2018 and the current crisis is an albatross for economic recovery. Therefore, we will only grow… when indigenous (people) accept responsibility of their duty to promote development through home-grown solutions...,” the seasoned lawyer said.

Under the $113 million engineering, procurement and construction (EPC) contract, which was awarded by the State Procurement Board (SPB) last Thursday, JOL and its partners are going to restore Munyati’s production capacity to 100MW.

Amid possible howls of discontent over the successive win by the JOL-Intratrek team, experts say there was “no need for such anxiety” as the parties were not only allowed to participate in multiple tenders, but had triumphed in a “complex three envelope tender process that closed in August 2014”.

So strict was the process that it required prospective bidders to demonstrate a five-year experience in managing similar projects, have annual turnovers of $50 million-plus and a competitive pricing proposal.

The scope of work also entailed the replacement of 15 existing boilers, overhaul of cooling towers and water treatment plant, refurbishment of two 50MW steam turbines and attendant civil works.

And after four local, and 72 foreign companies attended the compulsory site visit, only seven bids were eventually submitted. These included China National Technical Import Export Corporation, China Gezhouba Group Corporation Limited (CGGC), Helcraw Electrical and a Shandong Electrical-Transfrontier consortium.

With the first round of funding and technical compliance-review process requiring bidders to have “a high threshold score”, participants were also asked to have an exhaustive technical checklist of traceable and realistic funding credentials to demonstrate their ability to repower the 60-year-old Munyati.

As such, the stage saw five bidders failing to attain the 80 percent mark to proceed to the commercial envelope round, leaving only two technically and funding-compliant bids.

And after winning the Harare Power Station (HPS) tender last year, JOL was able to leverage its knowledge of the Zimbabwean thermal power market to grab the job.

Backed by emerging power firm Intratrek and giants such as Triveni India, and Thermax — an original equipment manufacturer from Delhi — the consortium then managed to shake off competition from CGGC whose price was $150 million.

According to government insiders, the JOL bid had initially hit a snag after the Zimbabwe Power Company (ZPC) had raised a last minute query regarding the Indian firm’s perceived delays in wrapping up its financial deal for the western Harare project.

On that basis, the accounting officer requested permission to negotiate with CGGC to “revise their price down and match JOL’s price”.

The concerns were, however, dismissed by the SPB as “irrational and illegal” on the basis that the power producer had already judged the Munyati funding bid as sound, and therefore it could not be derailed by an unrelated matter.

On the other hand, the proposal to have a parallel negotiation was deemed problematic in line with section 31 (1) (m) of the SPB Act, which also states that the procuring entity —in this case the ZPC — must accept the lowest valid tender offering.

“The request for proposal (RFP)… categorically defines the criteria and procedures by which successful bidders will be determined.  The accounting officers’ introduction of an… independent tender already concluded is, therefore, irrational and illegal,” read a note from the SPB , adding “funding matters were not totally independent since procuring entities were the ultimate beneficiaries”.

“Ordinarily the accounting officer should be the direct borrower and, therefore, this resolution is the most economic and legal outcome given the circumstances,” it said.

With annual revenues of $400 million-plus, JOL has a footprint across three continents and 52 countries.

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