Management controls and the procurement procedures at Tanzania Zambia Railway Authority-TAZARA have come under question following the company’s legal actions taken to recover advance payments, a process which should have been smooth if the company had put in place adequate advance payment guarantees from its suppliers.
TAZARA has sued another company, Kenites Investment Limited for failing to deliver after being awarded a K3 million contract.
According to a statement of claim seen by the Zambian Business Times – ZBT, TAZARA is claiming for an order that Kenites pays K784, 280 being the balance of the amount advanced to the company for the work, damages for breach of contract, interest, any other relief the court may deem fit and costs.
TAZARA advertised a tender for sealed bids from eligible potential suppliers for the supply and installation of a single Axle Drop Table and Portable Hoist System Electrical Jacks in 2012.
Kenites was the successful bidder and was awarded the tender and a contract for the supply and installation of a single axle drop table and for the supply of a portable hoist system electrical jacks.
The contract worth K3, 114, 200 was executed on 7th February 2013 and TAZARA made a 40% advance payment amounting to K1, 245,680 with the view that Kenites takes site possession and performs it’s part of the contract.
Kenites took site possession on 25th August 2014 and commenced civil works by digging a pit and engaging TAZARA’s civil department and purchasing quarry product from Mununga Quarry and according to the contract, Kenites was to complete works within twenty four weeks from the date of commencement of works.
The company then demanded that TAZARA makes another 40% advance payment and TAZARA demanded that Kenites furnish proof that the first advance payment had all been utilized and also demanded that the company provides an insurance bond of 80% to cover both the first advance and the second advance demanded for by Kenites but the company failed to secure the insurance bond of 80%.
On 8th July 2015, TAZARA and Kenites held a meeting at which it was discovered that during the bidding process, Kenites submitted documents indicating that technical support would be obtained from YALE in Germany and it was on that basis that the company was awarded the contract, however, Kenites obtained and paid for technical support from ASHOCK manufacturers in India.
Kenites did not supply or complete works on the installation of the single axle drop table or the electrical jacks and to date, the contract has not been performed.
On 5th December 2017, TAZARA reported the matter to the police and consequently, the two parties entered into a deed of settlement on 20 February 2018 in which Kenites consented to repay the payment advanced by TAZARA before 30th November 2018.
The deed of settlement expired on 30 November 2018 but Kenites did not finish refunding the advance and on 15th May 2020, the two parties entered into another deed of settlement under which Kenites was to make monthly minimum payments of at least K15,000.
On 31 December 2020,the second deed of settlement expired and Kenites only made two monthly payments in June and October 2020.
Kenites requested a six-month break from making payments due to the COVID-19 pandemic and requested to commence refunding in June 2021 but on March 22nd 2021, TAZARA advised that it could only consider the request if the arrears due under the expired deed of settlement were cleared in full.
TAZARA has not heard back from Kenites and because of the company’s actions, TAZARA suffered loss and damage. There are calls that the company should be further investigated as these advance payments seems to have been made without adequate risk assessment, which raises suspicion.
