Zimbabwe: Zesa Top Executive Under Fire for Prejudicing Power Utility of Millions

(File photo).
18 September 2020

Zimbabwe Electricity Transmission and Distribution Company (ZETDC) revenue assurance boss, Wilfred Shereni, is under fire for reportedly prejudicing power utility's subsidiary Zesa Holdings of millions of dollars.

The revelation is only one of the latest in a series surrounding the power utility's graft scandals.

Shereni is facing allegations of failing to sign contract addendums, failure to perform periodic reconciliations throughout the course of the prepaid meter installations and approving prepaid meter installations without adequate supporting documentation.

The pre-paid metering project involved three suppliers Solar Hart, Finmark Energy and Nyamazela - who, according to an audit report by PricewaterhouseCoopers (PwC), did not go through proper approvals by the Procurement Regulatory Authority of Zimbabwe (PRAZ).

After fishing out a possible prejudice on ZETDC revenues, PwC recommended that Shereni, together with the former managing director Julian Chinembiri and ex-finance director Thokozani Dhliwayo, face disciplinary action.

Reliable sources told this publication that to date, no action has been taken against Shereni, something that has raised questions within the ZETDC management and ZESA Holdings board members who were recently reinsted by President Emmerson Mnangagwa.

Reinstated ZESA Holdings executive chairman Sydney Gata refused to comment on the matter, only saying "I don't speak to the Press through the phone".

Acting ZETDC managing director Lovemore Chinaka did not respond to questions sent to him.

There are allegations that despite the dismissal and arrest of other directors, including Chinembiri, there has been deliberate inaction with regards to the Shereni case.

The report also said Shereni, together with the dismissed manager, was instrumental in the direct acquisition of pre-paid meters from suppliers without first getting the requisite PRAZ approval.

Furthermore, the report noted that the directive to procure before getting PRAZ's approval was given by the directorate, among them Chinembiri, something that could not be authenticated by the meeting's minutes.

This, according to the report, was in violation of sections 26 and 28 of the Procurement Act.

PwC also noticed a price anomaly between what was approved by PRAZ and the final quotation on the orders that was paid to Finmark (for single phase meters) and Nyamezela (for the three phase meters).

In addition, the report noted that Shereni had committed an "error" in capturing the prices for PRAZ approval and that no efforts were made by ZETDC to inform PRAZ of the price discrepancies.

Proceeding with unapproved prices was a violation of section 42(3) of the Procurement Act 22:14, which stipulates that procuring entities should comply with directives issued by PRAZ.

ZETDC procurement manager Phillip Chisango, according to the audit report, also violated section 42 of the Procurement Act by raising orders which captured the unapproved prices.

"Further to this, it appears Shereni circumvented the procurement department in his communications with PRAZ. This potentially contributed to ZETDC violating SPB [State Procurement Board, now called PRAZ] regulations," part of the report read.

It was also noted that Pfungwa Thomas Chindindi and Shereni violated section 26 of the Procurement Regulations (Statutory Instrument 171 of 2012) when they approved a purchase order which was not supported by appropriate PRAZ approvals.

The report further noted that none of the contractors managed to supply the contracted quantities within the stipulated timeframe and in this case, ZETDC was entitled to deduct liquidated damages from the contract price for each week of delay up to a maximum of 20%.

Liquidated damages, as specified in the addendum, were, however, not instituted against the contractors and based on PwC's computations, the liquidated damages would have amounted to US$20 538 for Finmark, US$148 500 for Solahart and US$253 750 for Nyamezela.

The total amount of US$422 788, which was not claimed in liquidated damages, represented the actual financial prejudice to ZETDC, implying that Shereni and Chisango should have effected the stipulated penalties when the suppliers failed to deliver.

There were also some payments which were made without adequate supporting documentation, particularly the inspection sheets.

According to the audit report, Shereni, together with other directors, allegedly exposed ZETDC to financial losses in all the cases where they approved payments that were not supported by sufficient documentation.

The report also noted that payment for labour costs on meters supplied by Solahart, but installed by ZETDC depot teams, together with the agreement to pay Solahart 50% of the labour component, resulted in prejudice to ZETDC amounting to US$103 275.

"This was wasteful expenditure as the service paid for had not been rendered as ZETDC staff had performed the installations," the PwC report read.

OK Zimbabwe scandal

Shereni, Dhliwayo, Enock Ncube (commercial director) Chinembiri allegedly contravened section 14 of the Public Finance and Management Act (PFMA) by failing to object to the said directives by former Energy minister Elton Mangoma to appoint OK Zimbabwe as third party pre-paid electricity tokens vendor without going to tender.

According to the report, by appointing OK Zimbabwe without going to tender, ZETDC may have suffered prejudice in the form of excessive commission.

ZETDC incurred irregular expenditure in the form of commission paid to OK Zimbabwe with a value of US$518 174,28 in relation to the unprocedural appointment of the supermarket chain.

"Consideration should be made to take action against the ZETDC board for failing to ensure compliance with the now repealed Procurement Act and appointing OK Zimbabwe un-procedurally.

"The ZETDC board should consider taking disciplinary action against Chinembiri, Dhliwayo, and Shereni for failing to comply with the PFMA and failing to raise objections to former Minister Mangoma's directives to appoint OK Zimbabwe without following procurement procedures," the report in part.

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