Chronicle Editor
Leonard Ncube, Victoria Falls Reporter
GOVERNMENT is now saving millions of United States dollars after plugging speculative procurement behaviours by some contractors who were overcharging for services, Procurement Regulatory Authority of Zimbabwe (PRAZ) chief executive, Mr Clever Ruswa, has said.
Government through the Treasury late last year pounced on some unscrupulous contractors and service providers when it temporarily suspended payment to contractors that were reportedly overpricing for services.
The exercise saw some contractors being delisted and, going forward, Government has adopted a “value for money” policy in which all contractors or suppliers must undergo due diligence to ensure the state is not fleeced through unjustified forward pricing.
Mr Ruswa, who was recently in Victoria Falls on a tour of road projects being implemented under the National Emergency Roads Rehabilitation Programme (ERRP2), said Government is pushing a value-for-money agenda and has since released some funds to PRAZ to capacitate the authority towards internal procurement by state entities and local authorities.
“You would find that aspect of value for money is very critical and it is part of the processes where we are anticipating that our procurement entities need to keep abreast with the market,” he said.
“Last year contractors were forward pricing, doing speculative behaviour and arbitrary, and Treasury had to put a blanket stop and asked all stakeholders to work together.
“We saved millions of dollars, especially in the construction sector where a lot of speculative behaviour was happening. From where we sit, we are looking at sector by sector and also this is impacting on provision of other items like groceries to the Government,” said Mr Ruswa.
He said a majority of the speculators claimed they were being paid late and claimed the bloated costs were meant to cover exchange losses.
Some of the service providers admitted to wrong-doing while others were defensive, said Mr Ruswa.
He said Government was pushing for electronic procurement and encouraging collaboration among Government entities and local authorities.
“We are now intensifying the project (value for money) by coming up with a pricing index where prices should be the same everywhere in the country. What we are encouraging the business community is that they should be mindful of the inflation nature,” said Mr Ruswa.
“Government promised PRAZ funds, which we now have and we are in the process of identifying service providers before a second stage of request for proposal. We are hopeful that come the second quarter we will start implementing.”
Mr Ruswa was part of the tour that was conducted by the Technical Monitoring Team led by Rural Infrastructure Development Agency (RIDA) director general, Mr Christopher Shumba. The team toured projects in Matabeleland North last week.
Government availed billions of dollars to fund the ERRP2 after it declared the country’s roads a state of disaster and last year allocated $30 billion through the Zimbabwe National Road Administration (Zinara).
Rehabilitation and upgrading of the country’s road network and other related infrastructure are among key National Development Strategy 1 (NDS1) projects.
In his remarks, Mr Shumba concurred with Mr Ruswa saying the issue of stakeholder collaboration was critical to avoid instances where projects stall as partners drag each other to court.
Treasury suspended payments for all contracts submitted as at July 31 after noting that ministries, departments and agencies (MDAs) were submitting pay runs for the disbursement of cash for goods and services procured using parallel market exchange rates.
Such a pricing framework by the suppliers of goods and services was causing inflationary pressures and also fuelling parallel market activities through unjustified movements in the exchange rate resulting in exorbitant prices of goods and services.
The inflationary pressures also resulted in the erosion of MDAs appropriated budgets putting pressure on the Treasury through increasing demand for more funding from Government, which was not aligned to the revenues inflows and created a fiscal risk of unsustainable budget overruns and deficits.
Therefore, in line with the Public Finance Management Act, the MDAs were also directed to rationalise their payment requests and operate within the confines of the willing buyer willing seller foreign exchange rate.
The MDAs were also directed to, in future, seek Treasury approval on contract prices in order to ensure effective control of public resources as guided by the PFM Act.
In addition, all payment runs submitted to Treasury should have been reviewed and signed off by the accounting officer ensuring value for money in procurement and confirming that the pricing framework is in line with Government policy. — @ncubeleon
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