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S Africa: renewables interest dampened by legal hurdles

July 27, 2012 Leave a comment

Beyondrics, Financial Times

By by Ruona Agbroko

July 26, 2012

South Africa’s latest round of renewable energy contracts has attracted interest from European developers after home subsidies have dried up, but legal uncertainty and rules over local ownership may cut the temper their enthusiasm.

So far the third round of bids for solar and wind projects has seen some developers stop short of a full committment, which is hardly helped by government holdups.

The deadline for bids to supply another chunk of the 3,725MW of renewable energy that South Africa wants to cut its reliance on coal is October 1. From previous rounds, foreign direct investment in renewables is at $12bn in the year to May. There are two further bid rounds slated for April 2013 and July 2014.

DLA Piper Australia and its South African partner DLA Cliffe Dekker Hofmeyr have advised more than 50 per cent of the successful bidders in the first two rounds of contracts and are working with companies in their current bids. “The majority of the developers are European based, particularly Italian and Spanish, and there is an increase in interest from German, French, Chinese and US-based developers,” Damian McNair, head of finance and projects for Asia Pacific at DLA Piper told beyondbrics… Read more.

Ghana Struggles to Cash in ‘Black Gold’ Dreams of Oil Riches

July 23, 2012 2 comments

Die Welt

July 12th, 2012

By Christian Putsch with K. Owusu Peprah
DIE WELT/Worldcrunch

SEKONDI-TAKORADI - The route to the training center is a crumbling asphalt road losing its battle with encroaching vegetation. The guards sitting in a wooden hut to our right barely look up as we drive past. Ebow Haizel-Ferguson is the director of the training center where we are heading; officially called “Sigma Base Technical Services,” it is Ghana’s largest “oil school.”

Steering the car to the left and through the thicket, a view suddenly opens up on to a railway graveyard. Haizel-Ferguson says proudly: “You’d be surprised what we’ve achieved out of nothing.”

Rust is eating its way through scrapped cars surrounding a large hangar. Through the dusty windows of the building, alignments of long work-tables can be seen. This is where in recent months Haizel-Ferguson and his team have taught 2,000 young people welding, pipefitting and other skills — but not for the rail sector: they’re only renting the premises in the Ghanaian coastal city Sekondi-Takoradi from the train company.

Since the 2007 discovery of the Jubilee offshore oilfield — one of the largest oil deposits ever found in Africa — only one thing has mattered in Ghana: black gold. For the country’s people it means the hope of better economic times. Investments in oil-drilling infrastructure have boosted growth by over 13%. And the rapidly expanding city of Sekondi-Takoradi is at the center of it all.

So is Haizel-Ferguson, who worked at Nigeria’s oil metropolis Port Harcourt for 22 years. The tall Ghanaian entrepreneur says he knows everything there is to know about oil: “I’ve breathed it, drunk it, and puked it.”

But Nigeria’s path is unfortunately one that Ghana is in danger of following. After decades of pollution by oil companies, oil thieves, and rebels, the Niger Delta is one of those places on the planet that look as if it’s straight from of an apocalyptic science fiction set. And while western oil companies lure employees to Nigeria with the highest bonuses in the world — a senior manager can earn 320,000 euros a year — Nigerian government figures say local firms account for only 18% of the value-creation process.

Very few Nigerians benefit from the commodity, and the oil boom has cost countless fishermen and farmers their livelihood. It is only in the last few years that laws relevant to granting supplier contracts have been tightened with the intent that two-thirds of them will go to Nigerian companies.

Cautionary tale

What happened in a country only some 100 km away is a cautionary tale — and Haizel-Ferguson wants to make sure the story doesn’t repeat itself in Ghana.

Expectations here are high indeed. Although so far the oilfields have produced less than expected, the Ghana Oil and Gas Service Providers Association (GOGSPA) says that the industry could create 100,000 jobs for Ghanaians. Two years ago, the Ministry of Energy promised a more cautious 10,000new jobs – and in early June 2012 announced that only 813 jobs have opened up so far. Meanwhile, as oil infrastructure is being built up, Ghanaian companies complain about how few of the contracts they obtain.

Others are benefitting instead. China, for example, which gave Ghana a 2.4 billion euro loan to construct oil infrastructure, is being paid back with 13,000 barrels per day. That’s a cheap price for the Asians who have also stipulated that a significant number of contracts be awarded to Chinese companies.

What clearly has little bearing is that five years ago the Ghanaian government drafted laws stipulating that companies like Tullow Oil (USA) and Kosmos Energy (Great Britain) had to award 90% of contracts to local firms. In any case, these laws have yet to come into force.

But all of this has not dimmed the hopes of many Ghanaians for well-paid jobs. And it’s why Haizel-Ferguson is schooling young men and women in oil industry skills at the old railway training center. “They are now qualified to apply for jobs. Bear in mind that the construction of oil industry infrastructure will be going on for another 20 years at least,” he says. “But so far they’ve not been giving the work to Ghanaians.”

If it is the largest, Haizel-Ferguson’s “Oil and Gas Skills Training Workshop” is by no means the only oil industry training center in Ghana. On the streets of Sekondi-Takoradi you see hundreds of posters advertising such institutes. All of them promise that a certificate from their school guarantees a job in the industry.

The offer is seductive to many. It didn’t take long to persuade Emmanuel Opoku-Agyeman, for example, who quit his job in the marketing department of a newspaper to pursue training. “It isn’t just Ghana that’s got oil, they’re discovering new fields all over Africa,” says the 31-year-old. “With a certificate, you can apply for jobs anywhere.”

Opoku-Agyeman earned 500 Ghana Cedi — about 200 euros — a month at his old job. In Takoradi, the “oil schools” hand out documents stating that the minimum monthly salary for a job on an oil rig is the equivalent of 2,800 euros – 14 times what Opoku-Agyeman was making. With prospects like that, it didn’t seem to him that what the Harvard Marine Petroleum Training Institute (HMPTI) was asking for a three-month course — $3000 (2,394 euros) — was excessive.

On the job market

The HMPTI’s Australian investors have made over an old office building where experienced oil industry engineers give the courses. Proudly, Opoku-Agyeman takes me on a tour of the premises and tells me about the packed days of learning, the great equipment the facility offers, the competent teachers. As one of the first 200 graduates, he’s now on the job market. He says he’s only going to start getting nervous if he hasn’t found something within the next few months — and he shouldn’t even be thinking that way, he says, there are no grounds for it, he has received excellent training “as you would expect from a Harvard school.”

No, there is no connection to Harvard University in the United States, school director Ron McGrath concedes. “The important thing is that we are qualifying young Ghanaians to work in the oil sector,” he says. The focus is not on the jobs requiring very high-level qualifications, but on occupations on the supplier side: “Future international regulations will require workers in the sector to have attended courses such as ours.”

McGrath doesn’t believe Ghanaian black gold expectations are too high, nor is the price charged by his institution. “Training in this field just is expensive, you need a lot of equipment and the teachers have to have top qualifications.”

Along with the government, schools like the HMPTI urge people to be patient. Coming up for reelection in December, President John Atta Mills has promised that oil revenues will be used to build up the infrastructure of the entire nation. And all you need to do is travel through Ghana for a few days to see the huge expectations such promises unleash in a country that is still one of the world’s poorest.

Five hours away from Sekondi-Takoradi is the village of Awukuguanyensi. Most of its population of 130 work as farmers. As you enter the village you pass a wooden sign that reads: “No electricity, no votes.” It’s a pretty empty threat, born of desperation — one way or the other, the village is likely to have to wait a long time for power lines to be put in.

On the day of my visit, the children of Awukuguanyensi are being vaccinated against Pneumococci and rotavirus for free. In Ghana, these two fatal diseases account for 20% of child mortality. Thanks to the GAVI Alliance’s mission to provide free vaccines to children in developing countries, 87% of the children in this area have been vaccinated — although overall the situation in the country is far away indeed from one of the major UN Millennium Development Goals, which is to reduce, by 2015, child mortality by two-thirds from what it was in 1990.

In this village, many families have lost a child to illness brought on by the miserable living conditions. And those who do make it past childhood face bleak perspectives. Isaac Kwasi, 25, says all he ever wanted was to be a farmer, but you can’t make a living from it. So many of his friends have moved to Sekondi-Takoradi. He sometimes gets text messages from them saying they still don’t have full-time jobs. But that’s not holding him back. Next year, he says, he’s moving too — to Takoradi, and its promise of black gold.

Read the original article in German.

Nigeria: Subsidy Fraud Incorporated – Fresh Scandal Surrounds FG’s Committee

July 23, 2012 Leave a comment

AllAfrica

Parliamentarians involved in subsidy scam.

By Jide Ajani

July 22, 2012

ANALYSIS

This will shock you. It is the report of Sunday Vanguard’s painstaking investigation with sources inside Aso Rock Presidential Villa, the Nigeria National Petroleum Corporation, NNPC, the Petroleum Products Pricing and Regulatory Agency, PPPRA, the Petroleum Equalization Fund, PSF, and the Petroleum Support Fund, PSF, just to mention a few.

It is about the serial complicity of some operators in the oil industry, government agencies and high ranking government officials in a mélange of corrupt practices occasioned by cover ups, deception and deliberate misinformation to unsuspecting members of the Nigerian public. It is a story of conflict of interest regarding those investigating and verifying the claims of marketers, a story of filth and willful negligence fueled by insatiable greed.

It was an innocent memo; but panic oozed from it.

The genesis of what has today become the fraud in the management of subsidy funds all started with a directive from the Federal Government of Nigeria. Although the House of Representatives Committee which investigated the management of subsidy on petrol presented its report which has become mired in scandalous controversy, occasioned by a bribery saga, the several committees set up by the federal government may not be about to get to the root of the matter by calling a spade a spade – there is the Nuhu Ribadu committee set up by the Nigeria National Petroleum Corporation, NNPC; there was the Aigboje Aig-Imoukhuede committee; and now there is another committee which just submitted its report penultimate weekend, headed again by Aigboje Aig-Imoukhuede.

Switching into a panic mode, the Peoples Democratic Party, PDP-led government of late President Umaru Musa Yar’Adua, sensing that long queues at the petrol stations across the country represents a clear and present national security challenge, sent a memo to the Petroleum Products Pricing and Regulatory Agency, PPRA. This was in October, 2008.

Dated October 20, 2008, the memo, signed on behalf of the then Secretary to the Government of the Federation, from the Presidency came through the SGF’s (PARASTATALS DEPARTMENT, GENERAL SERVICES).

The reference: SGF. 19/S.53/II/

The title of the memo: “RE: OUTCOME OF THE STAKEHOLDERS MEETING ON IMPORT PLAN FOR 4TH QUARTER, 2008/REVIEW OF PSF IMPLEMENTATION”.

“I am directed to refer to your letter Ref. No. A.1/1/228/C.7/III/468 of 16th October, 2008″, the content of the letter reads, “on the outcome of the stakeholders meeting of 14th October, 2008 to harmonize import plan for November and December, 2008 and to convey the approval of the Secretary to the Government of the Federation for:

“1) The import plan for November – December, 2008 as harmonized with the marketers during the stakeholders meeting and as recommended; and

“2) The participation of the recommended companies with storage facilities or valid throughout agreement that have completed the necessary due diligence processes to import the products in order to sustain adequate supply in the system.

“I am to further inform you that you are required to submit a report on the performance of the participating companies to this Office at the completion of the import exercise.

“Please accept the warm regards of the Secretary to the Government of the Federation”.

What had happened just before that memo was that the PPPRA had recommended that there was need for an expansion of the frontiers of fuel importation into the country and had, therefore, requested an approval from the Presidency.

Whereas possession of storage facilities was an earlier condition precedent, the need to include importers who had valid throughout agreement, with a view to making the product more available became inevitable.

In fact, some of the marketers who preferred to speak on conditions of anonymity made it clear that most of the “so called major marketers were actually in agreement with other lesser known importers who took the risk of financing and importation of petroleum products”. But this was to open the floodgate.

HOW SUBSIDY FRAUD IS COMMITTED

One of the major points where the fraud is committed is the Atlas Cove Jetty, Apapa, Lagos, which is Nigeria’s major delivery and re-distribution point for refined petroleum products. The second, strategic, point is represented by the plethora of depots in Lagos.

Atlas Cove, first built in 1979, and rebuilt by Julius Berger in 2000, is owned and managed by the Pipelines and Products Marketing Company, PPMC, on behalf of Nigerian National Petroleum Corporation, NNPC, as a storage farm/facility that channels refined products through System 2B pipelines that runs through Ejigbo (a suburb in Lagos). These pipelines supply petroleum products to the entire Western region of Nigeria, Kwara and Edo States. Depots served by the Atlas Cove Jetty include Mosimi, Ore, Ibadan and Shagamu. The Atlas Cove Jetty is also used to off-load coastal vessels as well as pump petroleum products to the Atlas Cove Depot for storage.

This command center for refined petroleum products is administered from Abuja by the PPMC, a subsidiary of the government owned NNPC.

A very dependable source at Atlas Cove told Sunday Vanguard that the country had always been held hostage by the petrol import cabal in connivance with the government that claims to be serving and protecting Nigerians.

A source said what has been in place at Atlas Cove can best be described as “round-tripping, as some of the marketers with allocation for importation are involved in the scheme.

According to the source, “they bring in a particular amount of refined product, declare the product on arrival to the relevant government agencies’ staff (DPR, PPPRA, Petroleum Equalisation Fund, PEF) and after these officials have okayed the product quantity in preparation for subsidy application, about half of the product originally meant for domestic consumption would then be diverted to other neighbouring West African states”.

In the case of private depot owners, “some of them doctor the figures they submit with a view to making undeserving claims. The quantity of products discharged some times does not tally with the inflated figures that are recorded.

It is one big, very big conspiracy. The importers are involved; the depot owners are involved; the people who are supposed to verify the claims are also involved. People collect subsidy for what they did not import. That is why the figures and claims keep going up. Those involved know themselves; and those to whom they make returns also know themselves. It is for government to dig deep and find these people out”, the source concluded.

Had it been limited to these categories of people alone, the corruption associated with the subsidy funds may not have assumed the humongous nature it assumed. But there were all manner of petty crooks in the toga of government officials and importers as well as depot owners who doctored records.

For instance, those with “valid throughout agreement that have completed the necessary due diligence processes to import the products” also connive with depot owners to make illegitimate claims.

CAUSE OF PANIC BY FG

Back to the FG’s memo of 2008! Before the memo, there was beginning to appear at gas stations across the country long vehicular queues. The PPPRA, Sunday Vanguard has been made to understand, designed a seemingly “more flexible import plan” which accommodated a few more companies.

There was need for the federal government to approve the arrangement made by PPPRA. That was the message conveyed by the letter from the Office of the SGF.

But it was not a magna charta for PPPRA to enthrone a regime of recklessness.

However, what was to follow was to create its own muddle.

On January 21, 2009, the federal government decided to reduce the pump head price of petrol.

The consequence of that was the creation of even longer queues.

Importers and marketers began to complain and there was need for the federal government to address their concerns.

Therefore, through the PPPRA, the FG summoned a ‘Technical Committee’ meeting of stakeholders. The meeting was held on Thursday, January 29, 2009.

A source in the Office of the SGF made Sunday Vanguard understand that the meeting needed to be called because “the government of the day was beginning to feel that there might be sabotage because of the growing shortage of petroleum products”.

At the meeting that day, there were representatives of NUPENG, PPMC, MOMAN, DPR, PENGASSAN, Ministry of Petroleum, IPMAN, TUC, CBN, DAPPMA, and a host of other stakeholders. It was at that meeting that marketers complained of the removal of standard deviation from the PPPRA Template.

After the meeting which lasted hours, resolutions were reached.

A copy of the resolution obtained by Sunday Vanguard reads: “On the issue of exchange rate, it was agreed that the CBN Marginal Rate plus 1% CBN commission and 1% bank charges should be added in the Template.

“Members agreed that the Freight Rate based on the 2009 World Scale will be considered

“For the financing cost element, it was agreed that the PPPRA should confirm bank interest rates and other charges that make up the cost and come up with a submission.

“Members agreed that the PPPRA should adopt the weighted average of Port Charges (NPA), on the Pricing template.

“Members agreed that the PPPRA should update the Pricing template with the reviewed parameters, and present same to the next meeting for consideration.

“The meeting advised that recommendation should be made on the need to dialogue with the NPA with a view to reducing their charges.

“In addition, the PPPRA may also seek intervention in the FOREX by exploring the possibility of a special window for an exchange rate for the wet products that capture a reasonable rate that guarantees predictable products importation”.

The resolutions of this meeting were conveyed to the federal government in a letter with reference number A3/9/118/C.7/T/84, on February 5, 2009.

However, typical of government activities in Nigeria, there was no immediate response.

This was at a time when the federal government brought down the price of petrol from N70 to N65. This led to serious shortages and queues were once again back at the filling stations.

Sunday Vanguard was informed by an industry source that the PPPRA “was instructed by the Office of the Honourable Minister of Petroleum Resources to immediately address the Marketers complaints with a view to eliminating long queues at the filling stations”.

It was in addressing that challenge that some smart Nigerians, made up of bankers and government officials, along with importers began to make the kill, as disclosed above.

COMMITTEES APLENTY AND CONFLICT OF INTEREST

The probe into the shady deals was first instituted by the Senate under the chairmanship of Senator Magnus Abe. Then came the drama of the House of Representatives’ Committee on Subsidy Management, with Hon. Lawan Farouk as chairman. The Senate Committee is yet to conclude its work. But the Farouk Committee which concluded its work has been entrapped by s bribery scandal involving a member of President Jonathan’s Economic Management Team, EMT, Femi Otedola of Zenon Oil and Gas,

Sunday Vanguard was informed last week in Abuja that the banks were also part of the problem, including the Central Bank of Nigeria, CBN.

Of particular interest is one of the banks whose Chief Executive is involved in some form of remedial activities being engaged by the FG.

Pouring through tones of documentary evidence, Sunday Vanguard was exposed to a verity of LETTERS OF CREDIT ostensibly opened for the transaction of fuel importation.

And whereas it could not be established during this investigation that the banks were directly involved in any form of “sharp practices”, according to a source, “the status of the committees chaired by Aigboje Aig-Imoukhuede of Access Bank can not escape the tar of conflict of interest”.

Whereas there was documentary evidence to prove that, like most other banks, Access Bank was involved in the financing of businesses conducted pursuant to importing petrol, the choice of Aig- Imoukhuede as the chairman of two committees involved in the verification of claims regarding subsidy does not in any way present the FG as conducting its investigations in an unbiased manner.

Firstly, some marketers and industry sources disclosed to Sunday Vanguard that “conducting a verification exercise the way the first committee set up by Ngozi Okonjo-Iweala, Finance Minister and co-ordinating minister for the administration’s EMT did, revealing that over N400billion should be refunded to the government, a sum which the committee said constituted wrongful payments, how would anyone explain the fact that the chairman of the committee also runs a bank that was involved in the business of financing importation of petrol?

“It was because some importers raised an alarm about the unfairness of the first committee by not allowing them to come forward and defend themselves that made Mr. President to set up another committee but again with the same individual as its chairman. This is not about the person of Aig- Imoukhuede but, in coming to equity, there is need to come with clean hands. It does more harm than good to the FG to appoint the chief executive of a participating bank to verify subsidy claims. Some of us know what Aig-Imoukhuede represents but it is not even in his interest to chair such a committee. Nigerians are watching and the insinuation is already there that all these is about man-know-man”, the source said.

Reminded that some of those who benefited from the subsidy wrongly are being prepared for prosecution, the source, who is one of the major importers, maintained, “Who does not know what will happen at the end of the day? Some of those that would be arraigned would be the ones who are not connected. Yes, some people would be prosecuted but the real issue here is the role of conflict of interest.”

When you add up the Senator Abe Committee, the Farouk Committee, the Ribadu Committee, the first Imoukhuede Committee and the second Imoukhuede Committee, the question to ask is, where would all these lead?

In addition, the role of the Economic and Financial Crimes Commission, EFCC, is gradually coming to light as inside sources say the commission is about to break loose.

HOW NOT TO TRACK SUBSIDY ROUGUES

Yet, investigations have revealed that there is a very simple (even simplistic) approach to tracking the subsidy thieves.

A very dependable source inside Aso Rock Presidential Villa disclosed to Sunday Vanguard that on December 24, 2010, a near scandal almost broke out when the PPPRA issued a “Request for a notarized Letter of undertaking on accuracy of petroleum products supply and evacuation records”.

The Presidency source disclosed that the move to ensure that all petroleum products importers and depot owners sign an undertaking of performance was first rebuffed.

“It was an attempt at ensuring that depot owners and importers do not engage in what has now become the sharing of the subsidy loot. When we got hint of the move, it was seen as a welcome development by some but again, there was need to ensure that a dislocation is not created in the supply chain for the availability of products as this was coming close to an election period”, the source said.

Even at that, Sunday Vanguard was able to discover that all the importers and depot owners were made to sign the undertaking that they would be straightforward in their dealings.

In fact, the undertaking that was signed by the importers and marketers also had penalties which, apart from leading to prosecution, also has the stringency of forfeiture of depots in the event that records are not accurate. Now, the PPPRA introduced a checklist.

Nigeria: FG, Oil Firm to Establish Two Refineries Worth U.S.$4.5 Billion

July 23, 2012 Leave a comment

AllAfrica

By YEMI AKINSUYI,

July 9th, 2012

The Federal Government has signed a Memorandum of Understanding (MoU) with the Petroleum Refining and Strategic Reserve Limited (PRSR), a renowned America-Nigeria joint venture, for the construction of $4.5 billion two modular refineries in the country.

Each of the refineries, expected to be completed and launched within 12 to 13 months, would refine between 30,000 and 60,000 barrels per day (bpd) of crude oil, and produce five million litres of petrol, diesel, kerosene and LPFO per day.

Minister of Trade and Investment, Olusegun Aganga signed on behalf of the federal government while the chairman of PRSR, Chief Edozie Njoku, endorsed for the company at a brief ceremony held at the ministry’s conference room in Abuja.

In his remarks, Aganga said the new agreement was part of the government’s National Industrial Revolution Plan aimed at ending the exportation of raw materials and jobs from Nigeria to the West, while encouraging the transformation of the raw materials and exportation of finished goods, which add value to the economy.

Aganga said: “This is part of the paradigm shift we talk about. We have to stop exporting crude oil and therefore we need more refineries. With the signing of this deal, I am sure the two refineries which will cost about $4.5 billion will be launched in a year’s time”.

The minister, who reiterated the government’s determination to improve the business climate and make Nigeria the preferred investment hub in Africa and globally, informed that the firm had a history of performance and trusted track records; having delivered on bigger projects in Russia and other countries.

He assured the firm of government’s technical support needed to accomplish the task, saying that the Nigerian National Petroleum Corporation (NNPC) was actively involved in the deal.

Aganga, while justifying private sector involvement in government’s transformation agenda, informed that the Eleme Petrochemicals was now 30 times more productive than when it was in the hands of government.

Also speaking, the Chairman of PRSR said the two refineries were part of a 30-month plan to construct six modular refineries in strategic places in Nigeria, pointing out that his firm would build simple refineries, “that will help tackle the problems of Nigeria as against the existing complex refineries.”

Njoku added that the six refineries, when completed, would have a combined capacity to refine 180,000 barrels of crude oil within the country and produce up to 30 million litres per day of refined oil products within 30 months.

The chairman said: “The refineries would be operated for the benefited of Nigerians by eliminating the current subsidy regime and significantly reducing the current market prices of kerosene and diesel by as much as 50 per cent”.

“During the construction timeline, over 10, 000 Nigerians will be employed and once operational, the six refineries will create over 150,000 direct and indirect jobs”, he added.

On the possibility of completing the pilot refineries on schedule, he explained that “modular refineries are comparatively easy to assemble in a relatively short time period”, adding that the company would produce.

Speaking in the same vein, the company’s technical partner, Graham Ford, described Nigeria as investment destination and expressed their readiness to partner the country to overcome its perennial crisis in the oil sector.

Corruption Watch queries R13m tender

July 22, 2012 Leave a comment

www.oil.co.za  Business Report

By SAPA

June 21, 2012

A Corruption Watch probe has found irregularities in a R13 million tender awarded by the department of transport (DOT), the civil society organisation said on Thursday.

The department had awarded a tender to a company which had not fulfilled all the necessary requirements, and overpaid for services by R10 million, it said in a statement.

Global Interface Consultancy won a tender to manage conference and communication services for the department of transport’s international investor conference in June last year.

It had submitted a bid for R13.5 million.

Losing bidder Indigo Design and Event Marketing bid R3.837 million – about one-quarter of the winning bid.

Indigo Design, a BEE-accredited company, lodged complaints with the department, the Public Protector, and Corruption Watch (CW).

“CW’s further investigation into the DOT tender award revealed gross irregularities in the tender process,” Corruption Watch said.

Corruption Watch had handed over its findings, as well as two cases involving irregular public tenders, to the Public Protector for further investigation.

It was in the process of formalising a working relationship with the Protector.

“We will closely monitor the cases that we hand over to the Public Protector and we will assist her office with further evidence and information gathered from the public,” said executive director David Lewis.

“It should be stressed that this case and each of the serious acts of corruption that we are investigating were reported by alert members of the public.”

Comment from the department could not be immediately obtained. – Sapa

Ghana: Terms of Super Oil Contracts Must Favour African Governments – Kan Dapaah

July 20, 2012 Leave a comment

AllAfrica.com

BY LAUD NARTEY

July 20th, 2012

It has been suggested that the trend in which super attractive oil contracts tend to favour foreign interest must change in favour of revenue capture to finance much needed development in African countries.

The proposal is not oblivious of the worrying dangers associated with increased revenue capture such as encouraging attitudes on the part of private sector to reduce taxable income through transfer pricing, thin capitalization and justification for declaring losses. Besides, there is also the potential for abuse of revenues, corruption and rent seeking in the management of resources among public officials.

Hon Albert Kan Dapaah, Chairman of Public Accounts Committee (PAC) of Parliament, made these suggestions when he addressed the official opening of the Summer School of the Africa Regional Extractive Industries Knowledge Hub at the Ghana Institute of Management Public Administration (GIMPA) last Monday in Accra. The school brought together experts in the extractive industry from around the African continent.

According to him, the implementation of such an idea has become more compelling against the backdrop of reduction in exploration risks profile in the oil and gas industry as well as the decline of political risk factors in most African countries.

In the face of these potentials, he urged that government must continue to negotiate terms of contracts with openness and in the spirit of partnership to ensure that interest of all parties were fairly balanced.

Hon Dapaah, who is also Member of Parliament for Afigya Sekyere West, accordingly called for the strengthening of Parliament and other institutions of State to ensure due diligence in contract ratification, budgeting and generally strong oversight in the management of extractive industries.

Similarly, revenue collection agencies must be supported with the capacity and will power to audit the cost of oil and mineral companies and collect appropriate revenues due the State.

He lamented poor development outcomes in many resource rich countries have led to citizens demanding that governments collect large shares of resource rent to finance development. He cited Ghana, Tanzania and Zambia as examples of countries which have embarked on reforms in their respective sectors to increase revenue.

In a speech read on his behalf, the Minister for Energy, Dr Joe Oteng Adjei, noted that Ghana had signed on to the Extractive Industry Transparency Initiatives (EITI) for the purpose of strengthening transparency and accountability in relation to revenue and payments from operators within the sector.

The initiative, which hitherto, was limited to the mining sector, has now been extended to the oil and gas sector.

He said government has given expression to its desire to ensure transparency in the sector by preparing a draft EITI Bill ready for submission to Parliament.

The purpose of the Bill, he said, was to provide the legal framework, and ultimately to enhance transparency and accountability in relation to payments originating from the natural resource sector of the economy and receipts by government.

A participant from Zambia, Lucy Bwalya Munthali, in an interview with the Public Agenda said, she expected that this year’s Summer school would equip her with new skills which would help her contribute to reformation of the extractive industry in her country.

She noted that African leaders were not doing enough as far as the industry was concern and this stemmed from the implementation of inappropriate policies.

Kenya: IEBC Tender Team Quits Over Biometric Deal

July 19, 2012 1 comment

 

AllAfrica.com

BY MOSOKU GEOFFREY

July 16th, 2012

Uncertainty hangs over the process of awarding the Biometric Voter Registration (BVR) solution kits contract after the IEBC tender committee stepped aside last week. The team quit following weeks of squabbles pitting some IEBC commissioners against its secretariat and they have been tussling over which firm is the most suitable to be awarded the tender.

The Praxedes Tororey-led committee handed in their resignation on Friday, only days after CEO James Oswago appeared to reject their second report for the multibillion-shilling tender award. Oswago had written to the Public Procurement and Oversight Authority (PPOA) seeking guidance on the recommendation to award the tender to Face Technologies of South Africa that emerged third in cost evaluation.

Face Tech, which quoted Sh4.63 billion, was ranked third by the commission’s technical evaluation committee behind 4G Identity Solutions of India and Symphony of Kenya with bids of Sh3.76 billion and Sh3.98 billion respectively. The committee also short-listed OnTrack of Israel which was asking for Sh8.31 billion to carry out the contract of supplying IEBC with the electronic voter registration kits.

Earlier the committee had recommended the award to 4G Solutions of India but the report was returned for reassessment when claims cropped up that the firm had been blacklisted in India. A team of eight officers of the technical committee travelled to India in May on a due diligence mission. The technical team reportedly said that 4G had been cleared of the performance queries.

Sources within the commission now say some commissioners are pushing for Face Tech to be given the tender due to its experience having conducted voter registration in South Africa, Namibia, Mozambique, Sierra Leone, Lesotho and Sri Lanka. Their argument is that even though 4G was the lowest bidder, it has no experience in voter registration, having only been involved in Identity Card registration in India.

Out of the the 28 firms that bid for the tender, only Face Tech (55m US$), Canadian firm Code (56mUS$), and OnTrack of Israel (99m pounds) had the experience of having registered voters. This is said to have informed the decision to consider Face Tech, which came second in financial evaluation and number one in technical evaluation. OnTrack emerged number one in financial evaluation. However in price quotation, 4G emerged the cheapest.

Procurement expert Dennis Omondi argues that the price of the bidder is not the automatic consideration when awarding a tender but the experience and financial stability of the firm also matter. “If number one or even number two are disqualified for any reason, the Act allows procurement entity to evaluate up to the time they get a contractor who best meets their objectives,” Omondi says.

Omondi argues that the law provides for room in price negotiation before a contract is signed. However, Oswago said the law envisages the lowest bidder be awarded the contract. “You have to look at the law and see what it provides,” Oswago said. He further argued that the tender and evaluation committees are bound by law to work within the budget and available funds for that specific procurement of goods or service.

Section 26 (3) of the Procurement and Public Disposal Act of 2005 states; “All Public Procurement shall be (a) within the approved budget of the procuring entity and shall be planned by the procuring entity concerned through an annual procurement plan.” Oswago told the Star that “IEBC wrote to Treasury and sought Sh3.4 billion which we were provided with as it was within our annual plan and therefore I don’t think the tender committee will work outside this amount. I will defend my officers with my life if their report is within the law”.

The current stalemate is threatening to derail the process ad return the country back to the manual registers that the Johann Krieglar Report condemned for being responsible for the 2007 general election debacle. The IEBC has announced that it will begin a new voter registration exercise next month, and it is not clear which system will be used. Some 19 million eligible voters will be targeted. Yesterday, Oswago said he has not received the tender committee’s resignation letter, and the process will not be affected by the move. “I want to assure Kenyans that come 3rd or 4th of December, the county will have a new voters register using BVR.”

In 2010, Code Inc of Canada was awarded the tender for a pilot project in eight constituencies across the country and although Code was among the 28 initial firms and tendered for 55m US$ (Sh4.6b), it was knocked out by the technical committee.

 

South Africa: Public Protector Must Investigate

July 16, 2012 1 comment

AllAfrica.com

July 15th, 2012

PRESS RELEASE

According to reports today, the ANC‘s former parliamentary Chief Whip signed a “blank cheque” contract with EduSolutions, the company at the centre of the Limpopo textbooks crisis, to do business with the ANC in Parliament.

This is the latest in a series of reports which raise serious questions about the links between EduSolutions and the ANC and whether it was the company’s political connections that led to it receiving a number of state contracts.

I will be writing to the Public Protector, Advocate Thuli Madonsela, to request that the relationship between the ANC and EduSolutions is subjected to a full investigation.

Numerous links have been reported to exist between EduSolutions and the ANC.

These include:

African Access Holdings, the holding company of EduSolutions, is a key donor to Zuma’s RDP Education Trust

EduSolutions founder and CEO Shaun Battlemann has links to President Zuma as a “champion” of his education trust, Mr Battleman also reportedly has links to Professor John Volmink, a former top advisor to Basic Education Minister Angie Motshekga, and former ANC Chief Whip Mbulelo Goniwe, who was reportedly responsible for signing off on EduSolutions’ “blank cheque” contract to do business with the ANC in Parliament.

Brand Talk, a fellow subsidiary of African Access Holdings, was one of the companies implicated in the reported irregular awarding of communications tenders during the tenure of former ANC Premier of the Western Cape, Ebrahim Rasool.

Numerous concerns have been raised about the awarding of the Limpopo textbook contract to EduSolutions, and whether the proper processes were circumvented because of the company’s reported political links.

Problems with the awarding of the tender include:

Allegations that 22 of the 23 tender bids that were received for the Limpopo textbooks deal were disqualified- without any explanation. This left EduSolutions as the sole remaining bidder

A legal opinion, commissioned by the Department of Basic Education and provided to the State on 17 January 2012, stated that complaints of irregularities regarding the awarding of the Limpopo textbooks tender were swept under the carpet, and that it would be “irresponsible for the National Government to continue to give effect to the contract without a proper investigation of the complaints”. However, the opinion was ignored.

The same legal opinion declared that the contract with EduSolutions is “probably invalid” for not complying with Section 217 of the Constitution, the Public Finance Management Act and the Treasury. However, the former Limpopo education administrator, Anis Karodia, was actively obstructed from implementing the legal opinion’s recommendations.

There are still too many unanswered questions regarding the awarding of the EduSolutions tender, and the company’s reported political links.

The Public Protector must investigate whether it is political patronage, rather than the needs of our learners, that dictated the awarding of this tender.

Annette Lovemore, Shadow Minister of Basic Education


Zambia: Witness testifies against Dora

July 16, 2012 Leave a comment

Zambia Daily Mail

By JIMMY CHIBUYE

July 13th, 2012

FORMER minister of Communications Transport Dora Siliya issued instructions to halt the contract for the supply, delivery, installation and commissioning of Zambia air traffic management surveillance radar system awarded to Thales Air Systems of South Africa , a State witness has testified.
Former Zambia Public Procurement Authority (ZPPA) director-general David Kapitolo said Siliya instructed the then permanent secretary Eustern Mambwe to halt the process and retender the duly awarded contract because of alleged corruption. Mr Kapitolo however said the only person who can make variations for the cancellation of the tender awarded by the Central Tender Committee (CTC) is the minister of Finance, who is the chairperson of the CTC and the variations should be done through a statutory instrument.

He was testifying in a case in which Siliya, who is MMD Petauke Central member of Parliament, is charged with two counts of abuse of authority of office, contrary to the Laws of Zambia.The tender for supply, delivery, installation and commissioning of a Zambia Air Traffic Management Surveillance Radar System was for Kenneth Kaunda and Harry Mwaanga Nkumbula International airports.

“I received a letter which was not directed to me but to Ministry of Communications and Transport permanent secretary Eustern Mambwe from the minister asking him [Dr Mambwe] to halt the tender and retender the process because the best evaluated bidder, Thales Air Systems, was not a manufacturer,” he said.

Mr Kapitolo said the procurement process and tender awarded to Thales Air Systems of South Africa was conducted in accordance with the ZPPA rules, up to the selection of the best evaluation bidder and notification but Siliya interjected. He said Selex Systemi Integrati was not among the bidders who submitted their documents for the tender of the radars because their bidding documents were rejected for being delivered late. Mr Kapitolo said he received a letter from Dr Mambwe, seeking the cancellation of the tender awarded by the CTC but he advised that the contract cannot be cancelled by an individual. He said he replied to Dr Mambwe’s letter and advised him that he cannot ask the CTC to cancel the tender because the manufacturer who authorised Thales Air Systems to bid was a reputable institution capable of making the radars.

Mr Kapitolo said unfortunately his letter to Dr Mwambwe was leaked to the media, forcing then President Rupiah Banda to set up a tribunal to investigate the matter. He said after the tribunal’s verdict which cleared Siliya of abusing her office, his contract of employment was terminated.
Mr Kapitolo also said the ZPPA received an anonymous letter alleging that the awarding of a contract to Thales Air Systems was marred by corruption and it should be halted. He said after investigations, it was revealed that the allegations contained in the anonymous letter were a ploy to halt the procurement process so that it could be redone and allow Selex Systemi Integrati to be part of the bidding process.
Mr Kapitolo said the permanent secretary is the purchaser and buyer of any ministry.

It is alleged that Siliya between February 20, 2008 and April 20, 2009 in Lusaka, employed as Minister of Communications and Transport, abused the authority of her office, by directing the cancellation of a duly awarded tender. The tender was for the supply, delivery, installation and commissioning of a radar system to Thales Air Systems South Africa, whose implementation was frustrated. This act was prejudicial to the rights or interests of the Government of the Republic of Zambia. Particulars of the second offence are that during the same period, in breach of laid down procedure, Siliya did accept a purportedly free offer from Selex Systemi Integrati for the repair of a Radar Head at Lusaka International Airport, as a result of which government actually paid K1, 943, 932, 360, an act prejudicial to the rights or interests of the Government of the Republic of Zambia.
The matter will come up today for continued hearing.

Bill to Stop Modern Day Slavery under Government Contracts

July 15, 2012 1 comment

ACLU

By Devon Chaffee

July 12, 2012

Last month the ACLU released a joint report with Yale Law SchoolVictims of Complacency, that documents the ongoing trafficking, forced labor and abuse of foreign workers hired through U.S. government contracts to work in support of U.S. military and diplomatic missions abroad. Recruited from impoverished villages in countries such as India, Nepal and the Philippines, these men and women – known as Third Country Nationals – are charged exorbitant recruitment fees, lied to about what country they will be taken to and how much they will be paid, and often have no choice but to live and work in unacceptable and unsafe conditions.  These abuses amount to modern day slavery; all on the U.S. tax payers’ dime. Now members of Congress want to act to ensure that federal funds are no longer facilitating such exploitative, abusive and illegal practices.

To help put an end to this trafficking and forced labor under contracts funded by the federal government, Senator Richard Blumenthal (D- CT) and Representative James Lankford (R-OK)) have introduced the End Trafficking in Government Contracting Act of 2012. The bill has strong bi-partisan support in both the House and the Senate. This means that even during an election year with heightened partisan tensions in Congress, the bill is one of a handful of measures that has a good chance of becoming law. Recently, the Republican-controlled House adopted the provision—without opposition—as an amendment to a larger defense authorization bill.

The End Trafficking in Government Contracting Act of 2012 will significantly increase oversight and accountability for employee recruitment under U.S. government contracts preformed abroad.  Currently many large U.S.-based government contractors refuse to take responsibility for the recruitment policies of their subcontractors that hire recruiters which in turn use fraudulent and illegal hiring practices to increase their profits. The End Trafficking in Government Contracting Act of 2012 works to address this issue by requiring all U.S. government contractors performing a substantial amount of their contract overseas to ensure that their subcontractors and the recruitment agencies they use comply with U.S. anti-trafficking laws, policies and practices. The bill also increases accountability by increasing reporting requirements and extending criminal prohibitions against fraudulent labor practices, including trafficking and forced labor, to contractors and subcontractors working overseas.

The Obama administration has long had a “zero tolerance” policy against human trafficking based on U.S. government contracts, but to date that policy has not been effectively implemented.  As documented in “Victims of Complacency” and numerous other government and non-governmental reports, hundreds of men and women have been trafficked on to U.S. military bases in Iraq and Afghanistan where they have been subjected to forced labor and other abusive treatment by U.S. government contractors and sub-contractors.  Yet, our government has failed to fully investigate these allegations; nor has it prosecuted or taken administrative action against a single contractor for involvement in such abuses. The End Trafficking in Government Contracting Act of 2012 is an important step towards making “zero tolerance” a reality, and to bringing an end to an unacceptable chain of profits based on trafficking, forced labor and taxpayer dollars.

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