Tuesday, September 29, 2020

P8 billion power project opens can of worms

Botswana Power Corporation (BPC) managers helped China National Electric Equipment Corporation (CNEEC) clinch the P8 billion Morupule Power Station contract through questionable means ÔÇô Sunday Standard investigations have revealed.

Minutes of a BPC board committee meeting, which sat on 12th September 2007, state that bidding companies, among them CNEEC, were pre-qualified because of their “technical capacity, financial capacity experience and expertise to undertake the project”.
Sunday Standard can, however, reveal that CNEEC was pre-qualified although it had failed to secure financing to justify their financial capacity and did not have a single completed project of the size of Morupule B Power Station to justify their experience and technical capacity.

Doubt on the capability of CNEEC were further raised by the Chinese Ambassador to Botswana, Ding Xiaowen, who advised Ministers Ponatshego Kedikilwe and Mompati Merafhe that the Chinese state owned company was not certified to undertake a project of that magnitude.

In an apparent attempt to help CNEEC’s financial capacity, a BPC manager issued a letter to the company confirming that should they be able to secure financing for the project, they would be the preferred bidder. The contractor used the letter to try and secure financing from SINOSURE, an export credit assurance company which the competing contractor, DEC/Zelan had put forward as their financier. DEC/Zelan was the only bidder who the Chinese ambassador said was certified to undertake a project of the size of Morupule B Power Station.

Although CNEEC failed to secure financing, BPC went ahead and chose them as the preferred bidder over DEC/Zelan, another Chinese company that had been recommended by the Chinese government and had been able to secure financing.

Sunday Standard can further reveal that DEC/Zelan has written a letter to the BPC board complaining of “behind the scene encouragement of financial institutions to support CNEEC”.

In another curious turn of events, the BPC allegedly gave the bidding companies wrong fuel analysis data while CNEEC were given the correct data. The BPC management then used this to undermine the bid by DEC/Zelan, arguing that the consortium had priced their bid on utilizing a fuel source not in compliance with bid documents. The fuel issue was cited as a major risk and non compliance.

Sunday Standard investigations have further turned up information that some BPC managers and board members undertook a site inspection of manufacturing facilities and completed projects of the bidders in September 2007. CNEEC, who were ultimately given the contract, was not able to show the team equipment manufacturing facilities or a completed project during the tour. DEC/Zelan, on the other hand, showed the BPC team multiple and extensive manufacturing facilities, including a 1200Mw completed power station in operation.

Although DEC/Zelan lost the bid, they have a history of executing EPC projects, among them the 2,100Mw Tajung Bin coal fired power station in Malaysia, which was completed in August 2007; the 2x500Mw Sultan Abdul Ziz power Plant in Malaysia, which was completed in March 1998; the 2x300Mw Chattissagrh power plant in India, which is still in progress; the 2x300Mw power plant in Rambang, Malaysia, which is still in progress; the 4x123Mw Tal Quadis Power Station which has been completed; the 2x300Mw Hai Phong Power Plant in Vietnam, which has been completed, and the 2x600Mw Nagarjuna power plant in India, which is still in progress.

CNEEC, on the other hand, has never completed a project of the size of Morupule B Power Station. They are currently undertaking the 3x330Mw power plant in Indonesia and the last ten years competed only one smaller EPC thermal plant of 2x125Mw in China.

CNEEC, which has been awarded the plum contract, was also allowed to increase its bid price by 30 percent after bids had closed. The initial bid by CNEEC at tender was US$693 million. When the contract was announced last week, it had shot up to US$ 970 million.
There are also unconfirmed reports that key members of the BPC technical evaluation team were threatened and forced to change their recommendation from DEC/Zelan to CNEEC.

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The Telegraph September 30

Digital edition of The Telegraph, September 30, 2020.