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Tanesco shelves plans to sell houses
By Ani Jozen
8th February 2010
CAG report backs MP`s fund misuse allegations
Tanesco Headquarters
Plans to sell seven staff houses belonging to the state-run Tanzania Electric Supply Company (Tanesco) have been put on hold following a parliamentary outcry over the issue, it has been learnt.
Well informed sources have told The Guardian that the plans were shelved following revelations by Sumve MP Richard Ndassa on how large amounts of money were spent refurbishing the houses which were to be sold to company directors at a fraction of the cost.
Contacted for comment on the move, the Tanesco Acting Managing Director, Eng. Stephen Mabada declined, only saying: I am not the one who gave the report. Please contact the person who gave you the information, said Eng. Mabada.
According to the sources, an audit report by the Controller and Auditor Generals office submitted to the Tanesco board of directors had established that Sumve legislators remarks were accurate.
The audit has also raised serious questions on the refurbishments, the sources say.
However, the report indicates that only the former managing directors house was being refurbished at a total cost of 600m/- and not all the seven houses as had been earlier indicated.
The other houses were being refurbished at costs ranging between 73m/- and 250m/- each, according to the report, which also noted that Tanesco was bound by the contract to pay the cost estimates.
An audit request by the board of directors to the CAGs office listed the terms of reference as checking on misuse of company funds, whether money used was authorized by the board, checking on the preparation of bills of quantities and legality of the selection of contractors.
The CAG was also asked to verify conformity of the tender with the Public Procurement Act of 2004 in announcing of the tender, preparation of tender documents and request for permission from the tender board.
It was similarly asked to check whether the refurbishments complied with the companys policy on how its houses are maintained, repaired or otherwise altered, the audit report noted.
The audit report noted that all legal requirements of the tender process were contravened.
It specified for instance that a total of 1.8bn/- listed in the various contracts given to contractors was an increase of 1.26bn/- outside what was authorized by the board of directors.
Payments made by Tanesco to the contractors by the end of September last year without authorization by the board were 982.2m/- against the authorised 681.65m/-, the report indicated.
The report said for instance that there was no proper assessment and adequate scoping of works, in explaining how the bills of quantities were prepared, showing the kind of work needed for each house.
The result is that after work started other works cropped up as variation orders, where investigations show that more than 500m/- were used to pay for additional works, showing clearly the lack of due diligence in the preparation of bills of quantities, it said.
Citing an example, it said improvements on house located at 89 Guinea Road were billed at 241,006,140/- while variation works (additional orders) cost up to 116,982,852/-.
Similarly, the bids and contracts of the refurbished houses lacked detailed specifications for the works, it said, noting that specifications were given in a hurried or summary form.
It also underlined that the procedure for authorizing variation orders and additional works was not followed, with work supervisors issuing frequent orders to the contractors to add works, without seeking authorization from the Tanesco tender board.
The directors who were expected to shift into those houses also gave frequent orders for rectification or additional works without authorization of the tender board, as if these were private houses, the report noted.
Investigation also showed that the selection of a contractor for the house where the former managing director was living and the purchase of a large generator for the house did not follow the procedure outlined in the Public Procurement Act of 2004, it said.
The contractor tasked with refurbishments on the house at 13 Chanza Lane, M/S Gwema Decorators Ltd started work without obtaining a permit from the Tanesco tender board. Despite the permit being issued later, this contravened provisions of the Act, the report emphasized.
The CAG faulted the procedure of picking the contractors, saying inappropriate methods were used as well as the use of wrong tender documents.
The contractors delayed executing the works for a long time, during which Tanesco continued to pay house allowances to all its seven directors who were expected to move into those houses, it said.
Each month each of the directors are paid 800,000/-, causing a loss of 22.8m/-, which these top officials would not have been given if the refurbishments had been completed in time, the report observed.
Tanesco also failed to deduct the costs of the delays amounting to 118.1m/- which would have been recovered on the basis of provisions between Tanesco and the contractors as damages for delayed works, it said.
There are questions in which Tanesco failed to exercise due diligence, for instance at Dr Rashidis house (13 Chanza Lane) where a 59.2 KVA generator was installed, which is too large for a residential house and more useful for a factory, the CAG report says, adding: A 15 KVA generator would have been adequate for the house and save costs for the company. At the Ministry of Energy and Minerals along Samora Avenue in Dar es Salaam they use a 25 KVA generator for a six-storey building.
Similarly, to use 17.3m/- simply for purchasing curtains is gross misuse of public funds, the report further says.
It also lamented that the Tanesco management has been making decisions without involving the board of directors or the Ministry of Energy and Minerals who would have advised or given appropriate directives.
SOURCE: THE GUARDIAN
By Ani Jozen
8th February 2010
Tanesco Headquarters
Plans to sell seven staff houses belonging to the state-run Tanzania Electric Supply Company (Tanesco) have been put on hold following a parliamentary outcry over the issue, it has been learnt.
Well informed sources have told The Guardian that the plans were shelved following revelations by Sumve MP Richard Ndassa on how large amounts of money were spent refurbishing the houses which were to be sold to company directors at a fraction of the cost.
Contacted for comment on the move, the Tanesco Acting Managing Director, Eng. Stephen Mabada declined, only saying: I am not the one who gave the report. Please contact the person who gave you the information, said Eng. Mabada.
According to the sources, an audit report by the Controller and Auditor Generals office submitted to the Tanesco board of directors had established that Sumve legislators remarks were accurate.
The audit has also raised serious questions on the refurbishments, the sources say.
However, the report indicates that only the former managing directors house was being refurbished at a total cost of 600m/- and not all the seven houses as had been earlier indicated.
The other houses were being refurbished at costs ranging between 73m/- and 250m/- each, according to the report, which also noted that Tanesco was bound by the contract to pay the cost estimates.
An audit request by the board of directors to the CAGs office listed the terms of reference as checking on misuse of company funds, whether money used was authorized by the board, checking on the preparation of bills of quantities and legality of the selection of contractors.
The CAG was also asked to verify conformity of the tender with the Public Procurement Act of 2004 in announcing of the tender, preparation of tender documents and request for permission from the tender board.
It was similarly asked to check whether the refurbishments complied with the companys policy on how its houses are maintained, repaired or otherwise altered, the audit report noted.
The audit report noted that all legal requirements of the tender process were contravened.
It specified for instance that a total of 1.8bn/- listed in the various contracts given to contractors was an increase of 1.26bn/- outside what was authorized by the board of directors.
Payments made by Tanesco to the contractors by the end of September last year without authorization by the board were 982.2m/- against the authorised 681.65m/-, the report indicated.
The report said for instance that there was no proper assessment and adequate scoping of works, in explaining how the bills of quantities were prepared, showing the kind of work needed for each house.
The result is that after work started other works cropped up as variation orders, where investigations show that more than 500m/- were used to pay for additional works, showing clearly the lack of due diligence in the preparation of bills of quantities, it said.
Citing an example, it said improvements on house located at 89 Guinea Road were billed at 241,006,140/- while variation works (additional orders) cost up to 116,982,852/-.
Similarly, the bids and contracts of the refurbished houses lacked detailed specifications for the works, it said, noting that specifications were given in a hurried or summary form.
It also underlined that the procedure for authorizing variation orders and additional works was not followed, with work supervisors issuing frequent orders to the contractors to add works, without seeking authorization from the Tanesco tender board.
The directors who were expected to shift into those houses also gave frequent orders for rectification or additional works without authorization of the tender board, as if these were private houses, the report noted.
Investigation also showed that the selection of a contractor for the house where the former managing director was living and the purchase of a large generator for the house did not follow the procedure outlined in the Public Procurement Act of 2004, it said.
The contractor tasked with refurbishments on the house at 13 Chanza Lane, M/S Gwema Decorators Ltd started work without obtaining a permit from the Tanesco tender board. Despite the permit being issued later, this contravened provisions of the Act, the report emphasized.
The CAG faulted the procedure of picking the contractors, saying inappropriate methods were used as well as the use of wrong tender documents.
The contractors delayed executing the works for a long time, during which Tanesco continued to pay house allowances to all its seven directors who were expected to move into those houses, it said.
Each month each of the directors are paid 800,000/-, causing a loss of 22.8m/-, which these top officials would not have been given if the refurbishments had been completed in time, the report observed.
Tanesco also failed to deduct the costs of the delays amounting to 118.1m/- which would have been recovered on the basis of provisions between Tanesco and the contractors as damages for delayed works, it said.
There are questions in which Tanesco failed to exercise due diligence, for instance at Dr Rashidis house (13 Chanza Lane) where a 59.2 KVA generator was installed, which is too large for a residential house and more useful for a factory, the CAG report says, adding: A 15 KVA generator would have been adequate for the house and save costs for the company. At the Ministry of Energy and Minerals along Samora Avenue in Dar es Salaam they use a 25 KVA generator for a six-storey building.
Similarly, to use 17.3m/- simply for purchasing curtains is gross misuse of public funds, the report further says.
It also lamented that the Tanesco management has been making decisions without involving the board of directors or the Ministry of Energy and Minerals who would have advised or given appropriate directives.
SOURCE: THE GUARDIAN
