Media Team | Thursday, March 28, 2024 | Lusaka
Dr. Ron Mwambwa, the Acting Auditor General, has released the Special Audit Report on the procurement of petroleum products from January 1, 2019, to December 31, 2022. This report, in compliance with the Constitution of Zambia (Amendment) Act No. 2 of 2016, Public Audit Act No. 13 of 1994, and Public Finance Management Act No.1 of 2018, has uncovered financial and other irregularities.
According to Section 5 (1) of the Public Audit Act No. 13 of 1994, the Auditor General must promptly prepare a special report if there are serious irregularities that may result in financial loss or hinder effective financial control. The Special Report has identified financial irregularities amounting to K483,274,318 and US$1,396,111,768 in the procurement of petroleum products.
Notably, suppliers were not paid a total of US$898,440,122, including interest charges and risk premiums, due to delayed payments. Additionally, there were overpayments of $36,373,827 to suppliers, potentially indicating deliberate fraud through inflated invoices.
The Report highlights a loss of $197,815,520 resulting from the sale of petroleum products at a price lower than the procurement cost due to subsidies. It also mentions wasteful expenditure of $40,895,182 on arbitration awards, legal fees, and arbitration costs, which could have been avoided.
Furthermore, there were irregularities in the charging of a trader’s margin of $58,550,400 without the Ministry’s approval. Additionally, there was a loss of funds amounting to $34,349,962 due to questionable contract clauses, among other irregularities.
Dr. Mwambwa suggests that the Ministry of Energy should follow the Public Procurement Act No. 8 of 2020 by submitting procurement plans to ZPPA to prevent uncompetitive/emergency procurements.
He also advises ensuring funds are secured before project commencement to avoid interest charges, exploring all options before direct bidding, and thoroughly reviewing contract terms to prevent loss of public funds.
Dr. Mwambwa urges stakeholders to exercise prudence in managing public resources and hopes for remedial action on the audit findings.
The Special Audit report, as mentioned by Ellen M. Chikale, Head of Public Relations, is available on the Office website www.ago.gov.zm for review.