The Tanzania Zambia Railway Authority (TAZARA) procurement processes has come under scrutiny following the company losing funds in advance payments that has left the company taking legal action to recover the said funds.
TAZARA has dragged Embrace Zambia Limited to the High Court for failing to adhere to contractual obligations and is demanding a total amount of K252,400.
Facts of the matter is that in 2012, the Authority made an invitation for sealed bids from eligible potential suppliers for the supply and installation of one set of locomotive load box.
Embrace Zambia Ltd won the tender and the parties entered into a contract for the supply and installation of a locomotive load box on 7th February 2013 valued at K950,000.
TAZARA made an advance payment of 40% of the contract price amounting to the sum of K380,000 with a view that the Embrace Zambia Ltd take site possession and perform its part of the contract.
The contract stated that the company would complete works within 30 days from the date of commencement of works,however,Embrace Zambia Ltd did not take site possession nor did it supply or install the locomotive load box but advised TAZARA that the equipment was ready for shipment and requested that the authority make a further advance payment of another 40% of the contract price.
TAZARA advised Embrace Zambia Ltd that in order for another advance payment to be made,the company raise the insurance bond provided to the the authority from 10% to 80% to fully cover both the first advance payment and the second advance payment demanded by Embrace Zambia Ltd.
The authority also requested that the project manager take steps to confirm that money had moved from the company to the manufacturers of the locomotive load box and it was discovered that no money was ever transmitted to the manufacturers by the company.
As of 19 August 2021,the contract has gone unperformed by Embrace Zambia Ltd.
On 8 December 2017,TAZARA reported the matter to Zambia Police and through it’s Managing Director, Embrace Zambia Ltd agreed to refund the authority the 40% advance on the contract price.
Consequently,the parties entered into a deed of settlement on 20th February 2018 in which Embrace Zambia Ltd consented to repay the payment advanced by TAZARA on or before 30th June 2018 together with a penalty fee of K80,500.
The deed of settlement expired on 30th June 2018 and Embrace Zambia Ltd only refunded K195,100 leaving a balance of K265,400. The parties entered another deed of settlement on or about 1st May 2020 under which the company was to make minimum monthly installments of at least K7,000.
The deed of settlement expired on 31st December 2020 and Embrace Zambia Ltd only made three monthly payments under it.
On or about 28 December, 2020, Embrace Zambia Ltd requested time relief on the debt due to Covid-19 and requested to be permitted to resume payments in April 2021.
On or about 16th March 2021,TAZARA informed Embrace Zambia Ltd that it would grant a time relief only after arrears due under the expired deed of settlement were paid in full.
TAZARA has since not heard back from Embrace Zambia Ltd and because of the actions of the company,the authority has suffered loss and damage.
Tanzania Zambia Railway Authority is demanding an order that Embrace Zambia Limited immediately pays the authority K252,400 being the balance of the 40% of the contract price advanced to Embrace Zambia Ltd by TAZARA.
TAZARA is also demanding damages for breach of contract, interest on any and all sums found due, any other relief the court may deem fit and costs.
