The Sunday Mail
Brian Chitemba Investigations Editor
The Rural Electrification Agency allegedly awarded a US$2,5 million wiring pole tender to a struggling timber producer and subsequently ordered its own subsidiary, Hotspeck Enterprises (Pvt) (Ltd), to bail out the bid winner.Questions are also being raised over how REA formed Hotspeck Enterprises without an enabling Statutory Instrument and Cabinet approval.
Energy and Power Development Minister Dzikamai Mavhaire said he could not discuss the alleged scam with this publication because The Sunday Mail was a “private newspaper”.
REA is a statutory entity established by an Act of Parliament and mandated to extend electricity grid infrastructure to rural areas. It is principally funded through a levy charged to the public on electricity purchases.
Investigations indicate that on April 17, 2012 REA contracted the Wattle Company — a Mutare-based timber producer — to deliver 26 000 treated poles worth US$2,5 million.
The Sunday Mail is in possession of Order Form Number 20538 (May 5, 2012) confirming the deal, but timber worth only US$1 073 361 was delivered.
The Wattle Company failed to supply the remaining poles and REA did not cancel the contract in line with procurement regulations.
Instead, investigations show, REA management ordered Hotspeck to treat timber poles using its own state-of-the-art equipment and then send them to the Wattle Company, which in turn billed the parastatal and sent them back.
The Sunday Mail is in possession of several invoices, as well as documents showing REA made Real Time Gross Settlement (RTGS) transfers into the firm’s Kingdom Bank account.
Asked to comment, Minister Mavhaire said: “I can’t discuss such issues and those you mentioned about the Cabinet because you are from a private-owned newspaper.”
REA chief executive officer Engineer Joshua Mashamba said they wanted to cancel the contract on March 4, 2013, but were stopped by the State Procurement Board which allegedly “advised that the two companies resolve the matter”.
Eng Mashamba said: “Wattle Company entered into an agreement with Hotspeck Enterprises (Pvt) Ltd, taking advantage of their state-of-the-art creosote treatment plant as they do not have a creosote plant and would subcontract other companies. The tolling agreement is purely commercial.”
A director at the Wattle Company, Mr Kufa, said: “I can’t comment on that issue; go back to your sources and get a comment.”
REA has also been wracked by claims that management formed Hotspeck Enterprises without Cabinet approval. Hotspeck is run as a private company though REA’s Manicaland electrification manager, Mr Joseph Magadze, heads it and is paid about US$20 000 monthly.
Eng Mashamba said the Rural Electrification Fund board established Hotspeck to generate additional income and Mr agadze was seconded there pending appointment of a substantive general manager. He said Mr Magadze was being paid a standard REA package.
“The REF board derived authority to generate additional non-levy income from Section 5(d) of the Rural Electrification Fund Act (Chapter 13:20) that provides that, ‘The fund shall consist of any other moneys that may accrue to it, whether in terms of this Act or otherwise.’
“Even as he is paid such allowances, his earnings are not as high as US$20 000 as alleged. REA continues to pay him because Mr Magadze remains a REA employee.”
