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BizDay Zimbabwe

Uncertainty over Zent equipment

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Uncertainty shrouds the fate of millions of dollars worth of equipment supplied to Zesa Holdings subsidiary Zent Enterprises by Indian firm, PME, though the latter had not placed orders.Sources said PME has been supplying transformer manufacturing equipment despite the fact that Zent, which specialises in the manufacture of transformers, had not placed any orders since 2012 neither did it have plans for such equipment.

According to an audit by the Auditor and Comptroller General the stock of the unsolicited equipment initially stood at $16 million but has since come down to about $8 million. The audit report was presented to Parliament recently.

Part of the equipment has since been used for the Zimbabwe Electricity Transmission and Distribution Company’s projects although this would normally happen well after the equipment had been delivered without any orders.

Management at Zent has since proposed that the equipment can be used for manufacturing transformers only where PME of India can offer better price than competitors.

The equipment had to be kept separately from formerly procured equipment when it became increasingly clear that complications could arise over the way the material was procured.

Energy and Power Development Minister Dzikamai Mavhaire had an opportunity to view the equipment during a familiarisation tour of Zent last Thursday, but would not immediately make a decision on how the issue should be handled.

“The proposal was made to Energy and Power Development Minister (Dzikamai Mavhaire). Otherwise there is no guarantee that the equipment will be used,” a source said.

The unsolicited equipment exerted financial strain on Zent as PME would demand payment for it although no orders would have been placed or an agreement reached for the material.

Zent has also had to bear with the high cost of storage for equipment literally dumped at its premises without its consent.
Efforts to get a comment from Minister Mavhaire and Zesa Holdings were not successful by the time of going to press.

Expectations are that the Zesa board soon to be appointed by the minister would provide guidelines on how best the issue of the “unwanted equipment” can be resolved. Zesa’s board of directors expired in February this year.

Sources said Zent was allegedly unduly put under pressure by its parent company to increase production even in instances when it had no outstanding orders, hence did not require the equipment it was made to take delivery of.

“It was a question of continuing to produce a product without any orders for it, but how can you just produce without orders yet the supplier would require payment,’ the source added.

Ordinarily, ZETDC, the transmission and distribution unit of Zesa would raise an order with Zent, which in turn would place an order with PME relative to requirements, but this basic process was blatantly skipped for unclear reasons.

However, Zent was made to continue receiving equipment from PME long after the contractual agreement for equipment the Zesa Holdings subsidiary required had lapsed.

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