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August 08, 2011

Allegations of wrongful enrichment in Malawi fertilizer subsidy scheme

by Lusubilo Sichali

Despite the 2010/11 Farm Input Subsidy Programme (FISP) review faulting the manner in which tenders of the supply and delivery of fertilizer were offered by government, the 2011/12 procurement process is almost a repeat of the previous scenario.

Last year, the FISP review observed that some of the bidders who offered higher prices, such as Mulli Brothers of P/Bag 5145, Limbe and Nyiombo Investments of P.O. Box 40654, Lilongwe were nonetheless given a lion’s share of the programme.

According to information gathered by Nyasa Times, the two suppliers have again this time round been asked by government through the Office of the Director of Public Procurement (ODPP) to supply and deliver a total of 12000 metric tonnes (10000 Urea and 2000 NPK) and 10000 metric tonnes (NPK) each at a cost of about K1.5 billion and K1.3 billion, respectively under the 2011/12 fertilizer subsidy programme.

The two suppliers are suspected to have close links with president Bingu wa Mutharika. Another supplier also with close business ties with the Head of State is Export Trading Group who has also been offered a contract to supply 10000 metric tonnes of NPK and is expected to be paid about K1.3 billion.

Another supplier, Farm-Chem, has been offered to supply 9000 metric tonnes, which include both NPK and Urea at about K1.2 billion.

Mapeto Wholesalers’ cut is 5000 metric tonnes, as is Farmers’ World. Other suppliers include Sealand, Transglobe Produce Export and Elvis Freight, among others. Their tonnages range from 1000 to 5000. Elvis Freight belongs to Noel Masangwi, southern regional governor of the governing Democratic Progressive Party (DPP) of president Mutharika.

Under the 2011/12 Fertilizer Subsidy Input Programme, government has planned to acquire a total of 90000 metric tonnes.

The 2010/11 review, conducted between December 2010 and February 2011 by the World Bank, Ministry of Finance, Ministry of Agriculture and Food Security, Office of ODPP and Central Internal Audit Unit, said the award criterion used in the bidding documents was weak and, therefore, did not ensure value for money.

“Awards were not relative to the unit price offered by bidders. Bidders offering relatively higher prices were in many circumstances awarded higher quantities. This was mainly due to the fact that the use of minimum price as a determinant of quantities awarded was not clearly stipulated in the tender document.

“The prices offered by bidders under the tender were also relatively higher compared with prices received for tenders for similar goods during the same period, implying that bidders perceived higher risks associated with FISP procurement,” the review read in part.

The 2010/11 review had recommended that the ministry of agriculture should publish results of the 2011/12 award in local papers and ODPP website and should write to all disqualified bidders giving reasons for disqualification of their bids. It has not done so yet, despite having already informed the winning bidders.

Nyasa Times

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