Home » General » Chinese Firms Fleecing Parastatals

AS Government accelerates the implementation of mega deals signed between Zimbabwe and China during President Mugabe’s 13th State visit to China last year, disturbing reports have emerged that firms tasked to undertake the infrastructure work were taking aantage and grossly inflating their invoices for unjust enrichment.

While relations between Zimbabwe and China are excellent, part of the agreement in the mega deals is that where China provides the funding, Chinese companies must undertake the work.

It is this stipulation that seems to have inspired greed among some of the companies that are charging Zimbabwe up to seven-fold more than what they charge for similar work in the private sector or outside Zimbabwe.

This comes at a time when a Chinese delegation, led by State Councillor Yang Jiechi is in Zimbabwe, to oversee the implementation of the deals.

Investigations by The Herald have shown that State enterprises and parastatals that have dealt with Chinese firms have been charged prices that are way above those in other countries in the region for the same services.

For instance, Zambia paid only $278 million for the expansion of Kariba North Power Station that added 360 megawatts to that country’s State-owned power utility, ZESCO.

The project was done by a Chinese company Sino-Hydro.

Interestingly, Zimbabwe will fork out $533 million for Sino-Hydro to expand Kariba South Power Station and the project is expected to add 300MW to the national grid.

Zimbabwe is going to pay $255 million more than Zambia, yet Lusaka is benefiting with an additional 60MW.

The deal once torched a storm when former Finance Minister Tendai Biti raised objections with the price adjustments from $355 million to $533 million last year.

Experts in electricity generation said while the scope differed, Zimbabwe was getting a raw deal from Chinese companies because the country’s experts in various sectors were not consulted when such deals were sealed.

“For instance, the Chinese will give you a good quality sample when negotiating a deal but when they win the tender, they then make profit margins from giving you sub-standard stuff if there is no strict supervision,” said an expert who requested anonymity.

“They also take aantage of the fact that the payback period is usually around 20 years on concessionary terms, so they tend to inflate their prices knowing that Zimbabwe desperately needs money for such projects.”

Sino-Hydro was also awarded the tender for the expansion of Hwange Thermal Power Station that would add 600MW at $1,1 billion while another Chinese company Huawei sealed a $218 million deal for the upgrading of the NetOne network.

Eyebrows have also been raised regarding Huawei Technology’s dealings with NetOne, documents at hand show that prices were always inflated where NetOne was concerned as compared to other mobile phone companies.

For instance it is alleged that for the Access Microwave, Huawei charged Telecel Zimbabwe $7000 per unit while for NetOne the price was put at $55 000 per unit, an increase of over 750 percent. This was for the national broadband project.

For the Radio Base Stations, Huawei charged Telecel Zimbabwe $20 000 per unit while for NetOne the price was pegged at $35 000, an increase of more than 75 percent.

While for the towers Huawei’s unit price for Telecel Zimbabwe was $145 405, it shot to $170 000 for NetOne, an increase of more than 30 percent.

For instance, it is alleged that Huawei could have charged NetOne double the figure for its fibre-optic cable project when compared to what it charged Liquid, a company associated with the parastatal’s major competitor, Econet.

Huawei charged Liquid $66 million for the fibre optic cable project.

Officials from Huawei in Harare were yesterday evasive when The Herald sought to find out the breakdown of the $218 million network deal with its public relations manager Mr Lightman Xei pleading with the paper not to write the story.

He referred The Herald to NetOne citing customer confidentiality.

Initially, Huawei said they had nothing to do with Econet.

“Huawei is trying its best to assist its business partner (NetOne) to succeed. We are all trying our best to do that. We are also doing a lot of Social Corporate Responsibility to contribute to the society which we operate in”, said Xei.

Information Communication Technology minister Supa Mandiwanzira confirmed receiving such reports.

“We have received similar allegations from many people and we are obviously very concerned about them. As a Ministry, We are actively engaging Huawei to verify their pricing and make sure that NetOne is not being prejudiced. I have engaged Huawei management at the highest level in the country and they are being cooperative. They have promised me a detailed explanation of their pricing and a response to the allegations that they are fleecing our government-owned telcos.

“I have also asked the NetOne Board to thoroughly interrogate the prices they got and give me a report. If the allegations are proven true, we will take appropriate action which will include the renegotiation of the supply agreement. If the allegations are not true, then we close this chapter and move on to rapid implementation of the project without the burden of unsubstantiated allegations,” Minister Mandiwanza said.

Efforts to get a comment from Finance and Economic Development Minister Patrick Chinamasa on the deals and why Government was not engaging experts to assess the actual project costs were fruitless.

There are reports that Government lacks the expertise to assess the project costs with sources saying the country was not short of consultants to fill in that gap.

Minister Chinamasa was not answering his mobile phone.

On a bilateral level, Zimbabwe and China enjoy cordial relations dating back to the days of the liberation struggle when China offered material and moral support.

Source : The Herald