Industry players within the construction industry have expressed shock at how Water Utilities Corporation (WUC) disregarded their own procurement rules and regulations, and even national policies when dealing with Khato Civils/South Zambezi Evolution Engineers JV for the construction of the 100km long transmission pipeline and associated works from Masama Wellfield to Mmamashia water treatment plant.
On the 17th of June this year, Water Utilities Corporation (WUC) Chief Executive Officer Gaselemogwe Senai wrote to Permanent Secretary in the Ministry of Land Management, Water and Sanitation Services requesting for direct payment of suppliers for the contract.
WUC requested MLWS to pay directly a whopping P214 million to three South African companies engaged by Khato Civils/South Zambezi Engineers JV.
According to the letter ArcelorMittal South Africa is to be paid P127 million directly by WUC to supply steel sheets to be used in the manufacturing of the steel pipes, Africa Pipe Industries to be paid P77 million for the supply of pipes and socketed joints.
Drehmo Africa is to supply, deliver and commission valves for over 10 million. WUC will directly pay these suppliers as upfront despite not being contracted to them. Contract specialists have raised questions on not only the blatant disregard to procurement laws but the associated risks that government is placing itself in by directly dealing with entities it has no contractual recourse with.
Further to this, the Government of Botswana has put in place Economic Diversification Drive (EDD) regulations which compel all organisations to source materials and services in Botswana. WUC CEO Senai has defended the procurement of materials in South Africa, saying that it is not against government policy of EDD as they are not aware of local companies who can supply the materials.
Khato Civil Executive Chairman Simbi Phiri said that they decided to procure steel sheets from South Africa because no local company could supply them with the material. "Had we procured in Botswana they had to weld the sheet to make steel pipes which was going to take almost two and half years so we chose the Arcelormittal and Africa Pipe Industries since they do spigot and socketed joints," he explained.
On why WUC had to pay directly to the suppliers, Phiri said that this is an emergency project and they had to fastback the supply of the material by paying directly to the supplier.
A furious local contractor said that what WUC is doing is unethical and against the procurement rules and against government EDD policies.The local contractor asked rhetorically: "As Batswana contractors we have been denied this facility of government paying suppliers directly so why for a foreign entity". He went further to lament how many Citizen Contractors have either closed shop or are wallowing in debt because of having been denied the opportunity by Government to directly procure materials for them.
In another twist, the publication has learnt that only a month ago, Khato Civils was granted an advance payment of P90 million much more than what they had asked for.Thapelo Keitseng said that for advance payment, the contractor must provide an advance guarantee of an equal amount to the advanced nothing more nothing less. "In the case of Khato their advance guarantee was P8 million but they were advanced P90 million to start the project," he said. Khato Civils South Zambezi Evolution Engineers JV have been contracted to construct the 100km long transmission pipeline and associated works from Masama Wellfield to Mmamashia water treatment plant.