TINASHE MAKICHI
The Civil Aviation Authority of Zimbabwe (CAAZ) is seeking $25 million from Afreximbank to finance an aerospace management system after the authority’s board raised concerns over the capacity of a contracted Spanish firm to bankroll the project.
Zimbabwe is seen as lagging behind in adopting modern air traffic control and experts say the multi-million dollar project could improve aviation safety and security in the country.
The awarding of the $25 million formerly valued at $33 million tender to Indra Sistema has been mired in controversies as due process had not been followed. Indra is said to be also looking for an export credit agency (ECA) offshore cover for Zimbabwe risk.
Former Transport and Infrastructure Development Minister Joram Gumbo was accused of allegedly directing CAAZ to unprocedurally award a contract to the Spanish company without going through the tender process. Gumbo is alleged to have called for a board meeting in August last year where he sought board approval to award the contract to Indra Sistema.
However, there are concerns that the tender may have been inflated and the minister’s alleged actions also violate the Supreme Court judgment which cancelled the tender to Indra Sistema and ordered the Procurement Regulatory Authority of Zimbabwe to flight a fresh tender.
Well-placed sources at the aviation authority told Business Times that the Spanish company’s capacity to carry out the project is questionable as it was moving from one bank to another soliciting for funding from both local and international financial institutions but to no avail.
According to documents seen by this publication, the then State Procurement Board had given Indira the direct award on the basis that they had “a funding package” through a company called HOMT. This, however, never materialised and ordinarily the tender was supposed to be cancelled.
“Remember these Spanish guys have been moving from bank to bank looking for funding. Their award by the State Procurement Board was based on the fact they proclaimed to have funding. They now have an indicative term sheet from Afreximbank but they require ECA offshore cover for the Zimbabwe risk,” a source familiar with the developments said.
“As a board, we said we needed to cancel the tender as they have not availed funding, which forms the basis of their direct award, after a year. Now they are making us fill all these documents for Afreximbank which is as good as us finding our own money.
“They got a presidential award on the basis they had funding which never came. As they failed to avail funding why should they benefit from a direct award if CAAZ is seeking the funding on their own? It should be cancelled and an open tender done. We have since raised a lack of confidence in the capacity of the company.”
CAAZ general manager David Chawota told Business Times that there has generally been lack of appreciation on how the vendor financing is structured.
“There has been a general lack of appreciation of how vendor financing is structured and it is not Indra Sistema who is supposed to be looking for the funding but what they can only do is to create a structure that will make sure we can secure the funding required for the project,” he said.
“As we speak we are in discussions with Afreximbank for a facility and they are talking to us to see whether we have the capacity to repay the money. On the figure reducing to $25 million from $33 million it’s not revaluation but a reduction in scope.”
In a proposal made by Indra to Gumbo in October 2017, the company said, “Indra is confident to be among the best partner for the Ministry of Transport and Infrastructure Development and CAAZ to deploy such strategic programme, not only for the excellent financial conditions we are proposing, but also for our position in the ATM world. Indra is also the original equipment manufacturer of all the equipment proposed and is committed to fully install and put in the operation the complete system in 18 months.”
