US Ambassador backs American firm, blames Escom
United States Ambassador to Malawi, Virginia Palmer, has backed the US company that lost the multi-million dollar contract to supply standby generators to the Electricity Supply Corporation of Malawi (Escom) to avert a power crisis the country is experiencing.
APR Energy is an American company that participated in the tender process early this year, offering to hire out power generation equipment through a lease framework agreement with Escom.
But the US power firm lost the $78 million contract to Aggreko International Projects after Escom decided to do the evaluation of bids twice, a process Office of the Director of Public Procurement (ODPP) described as irregular in its findings later.
In a letter dated December 7 2017, Palmer supports the concerns APR Energy raised after the suspicious procurement, citing irregularities in the procurement process.
“APR Energy is concerned over irregularities during the procurement process and has laid out these concerns…” Palmer says in a letter to Escom Chief Executive Officer, Alexon Chiwaya.
“Since I believe many of APR Energy’s concerns are credible,” Palmer indicates, “I hope the attached letter will receive due attention”.
The Escom procurement process started by first seeking approval from the ODPP to use a Restricted Tender on October 4 2016. With the urgency it deserved, the ODPP granted Escom permission and 11 companies were approved and shortlisted
APR Energy was among the 11 companies that participated in the tender.
The first evaluation dated December 28 2016— Lots 1 and 2, Mapanga in Blantyre and Kanengo in Lilongwe, respectively— were awarded to APR Energy. Aggreko International came second and was given Lot 3, which was Chinyama in Kasungu.
But Escom, for some reason, decided to do a second evaluation in March 2017 and, to the surprise of APR Energy, the results changed as the local power utility company opted for South Africa-based Aggreko International Project.
All the three Lots were awarded to Aggreko, a change that irked the US company who suspected foul play.
APR Energy requested for a full exit report after the cancellation but, to date, the US firm is still waiting for the report from Escom, further fueling suspicions over how the procurement process was conducted.
The American Ambassador takes time to remind Escom about substantial resources her government has invested in Malawi’s energy sector growth and reforms, including strong governance and transparency provisions needed on US taxpayers’ money.
“Continued US assistance is contingent on clear, fair and open application of relevant laws, regulations and procedures. Since I believe many of APR Energy’s concerns are credible, I hope the attached letter will receive due attention,” says Palmer in the letter to Escom.
Cliffe Dekker Hofmeyr Inc, lawyers for APR Energy, in a letter they wrote to Escom raising their concerns, warned that Escom was on the brink of violating Malawi’s procurement laws, international tendering and procurement norms “through the manner in which it is attempting to force through the selection of one particular vendor (Aggreko), by sidestepping the proper legal process that Malawi’s own legal system has laid down”.
“At the Public Bid Opening, which occurred on December 28 2016, it should be a matter of public record that our client (APR Energy) had the lowest overall price, or cost to Escom, for lots 1 and 2 (Blantyre and Lilongwe),” the lawyers say.
“However, following a process which is not clear to our client [APR Energy], and due to facts as yet undisclosed, the procurement proceedings were subsequently cancelled by Escom by way of notice dated September 6 2017,” the letter reads in part.
An investigation by the ODPP validated the concerns APR Energy raised after the award. ODPP found two key anomalies, among others, that messed up the procurement process:
• A company known as Apac Energy found itself on the list when it was not on the list of companies shortlisted to participate in the restricted tender process
• Evaluation of bids was done twice, which opened up the process to manipulation
Based on that, and the complaint from APR Energies, the ODPP recommended the cancellation of the contract between Aggreko International Projects and Escom
But, last month, new Escom boss Alexon Chiwaya reversed the decision and awarded the contract to Aggreko, who have since signed a PPA agreement with Escom and has already been approved by the Malawi Energy Regulatory Authority.
However, the emergency generators have not been installed in Blantyre and Lilongwe as promised, raising concerns as to whether the leasing of generators is the answer to the country’s electricity supply woes.
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