Why SGR tender is bone of contention for state entities

Friday September 24 2021
SGR PIC
By The Citizen Reporter

Dar es Salaam. The multi-billion-dollar tender for lots 3 and 4 of Tanzania’s standard gauge railway (SGR) project has turned out to be a serious bone of contention for two key government entities.

While Tanzania Railways Corporation (TRC) wants Turkish firm Yapi Markezi to be picked for the job through single-source procurement, the Public Procurement Regulatory Authority (PPRA) is of the view that the contractor should be identified through competitive tendering if Tanzanians are to get value for their money.

The third and fourth lots of the SGR project involve designing and building a 533-kilometre rail line from Makutopora to Tabora, and Tabora to Isaka, respectively.

Reached for comment yesterday, PPRA acting director general Mary Swai said she was not ready to discuss the matter in the media.

“I’m not the government’s spokesperson...I’m not ready to discuss government issues in the media,” she told The Citizen.

According to documents independently obtained by The Citizen, TRC and PPRA have engaged in official communication on a number of occasions, with the former pressing for single-source procurement.

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In its letter dated July 23, 2021, TRC explains what it sees as benefits of awarding the tender to Yapi Markezi.

But in its response – which was dated July 27, 2021 – PPRA states why competitive tendering should be given priority.

“The Authority would like to advise that, as per Section 64 (1) of the PPA, 2011 and Regulation 149 (1) of PPR 2013, competitive tendering should be given priority in the procurement of goods, works or services. On this footing and as per detailed advice provided in the matrix attached to this letter, the Authority advises TRC to consider using competitive tendering in obtaining the contractors for lots 3 and 4,” PPRA says in its letter.

The authority adds that a competitive tendering process will ensure that the government gets value for money in the project.

According to PPRA, it was through competitive tendering that the government was able to save $1.03 billion (about Sh2.37 trillion at current exchange rates) when it floated the tender for Lot 5 of the SGR.

The tender to build the SGR from Mwanza to Isaka was awarded to a joint venture of M/s China Civil Engineering Construction Corporation and China Railways Construction Corporation (CCECC-CRCC), which quoted $1.326 billion (inclusive of VAT), while Yapi Merkezi cited $2.356 billion (about Sh5.4 trillion).

“It was a huge difference of $1,030,068,831.21 and therefore, the Government could not have saved this amount if it could have opted for a single source method of procurement,” PPRA says in its letter.

In gunning for Yapi Merkezi, TRC director general Masanja Kadogosa, who is also the State-owned firm’s chief accounting officer, says in a letter that although the TRC tender board had advised that the contractor for Lots 3 and 4 be picked through competitive bidding, he had to seek a review because awarding the tender to Yapi Merkezi would have several benefits.

The Turkish firm, the letter says, was in a position to execute the job well because it was already undertaking similar work in the country, and that it had mobilised a plant, equipment and staff in Tanzania.

The letter adds that although M/s CCECC-CRCC also had a plant, equipment and staff in the country, Yapi Merkezi had already built 91.74 percent of Lot 1 of the SGR (from Dar es Salaam to Morogoro) as of June 2021, while the section being built by M/s CCECC-CRCC was only ten percent complete.

According to the communication, while it was true that contractors for Lots 1, 2 and 5 were picked through competitive tendering, Yapi Merkezi was better placed to swiftly move its plant, equipment and staff from Lot 1 to Lots 3 and 4, and thus complete the work for operations to start.

But according to PPRA, value for money should supersede the need to swiftly complete the work, noting that it was TRC’s task to ensure that gives the contractor appropriate time to mobilise plants, equipment and staff.

“On the issue of mobilisation time, which the Accounting (officer) had been insisting that M/s Yapi Merkezi will have short period of mobilization, the Authority advises that TRC should clearly provide in the tender document, the appropriate time required for mobilisation so that bidders who will participate in the competitive tendering can be assessed on that criterion as well,” PPRA says in its letter.