By Tawanda Musarurwa

HARARE – The Zimbabwe Electricity Transmission and Distribution Company (ZETDC) has quickly moved to purchase all outstand-ing distributor transform-ers from a company it had awarded a tender in 2010 to supply the products.

In 2010, ZETDC floated a tender for the supply of dis-tributor transformers, which was won by Pito Engineering (Pvt) Ltd.

But over the past f ive years, ZETDC had only purchased a mere 28 percent of the ten-der value awarded to Pito.

News Update as @ 1530 hours, Thursday 28 April 2016

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ZETDC in panic mode after tender default

Pito Engineering director Mr Alex Chideme told the Parl ia-mentary Portfol io Committee on Mines and Energy earl ier this week that ZETDC had engaged the company and agreed to purchase the bal-ance of the tender value by the end of this year.

But that was only after Pito Engineering had made an init ial appearance before the same committee two weeks previously.

“We engaged ZETDC and the main thing was the tender which was awarded in 2010, which is the distribution transformers. They had partly written orders for that tender.

“The full tender value was $9 980 000, and so far what is outstanding is $7,3 mil l ion. The balance we had supplied between 2010 up to now.

“When we engaged the

ZETDC about two weeks ago they said to us ok fine we have come at the right time this is now your opportu-nity to supply the remaining transformers because they had had a lot of transform-ers being stolen throughout the country.

“They said they need about 1 600 transformers for this year and our order remain-ing has 1 342, so they said going to purchase all those transformers which are on our order this year,” said Mr Chideme.

ZETDC is a subsidiary of ZESA Holdings, which is responsible for the transmis-sion of electricity from the power stations, the distri-bution of electricity and its retail ing to end users.

Apparently, during the six year period, ZETDC was purchasing most of its dis-tribution transformers from ZESA Enterprises (ZENT) -

an investment arm for ZESA Holdings that holds a diver-sif ied business portfol io.

“ZETDC was ordering transformers from its sis-ter company, ZENT which manufactures similar type of transformers. The excuse they were giving were that by ordering from ZENT instead of Pito, they were protecting their business,” said Mr Chideme.

The issue of tendering in the electricity sector has been in the spotl ight this week, with another ZESA entity, PowerTel, having been alleged to been un-proce-durally awarded the contract to become the only author-ised aggregator for ZETDC prepaid electricity tokens at the behest of then Minister of Energy and Power Devel-opment Dzikamai Mavhaire and permanent secretary Mr Patson Mbirir i.●

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By Funny Hudzerema

HARARE -The Ministry of Finance and Economic Development has started developing an Interim Poverty Reduction Strategy 2016-2018 targeting at ensuring growth and poverty reduction in the country.

The ministry says it will conduct some consultative meetings in all the provinces between May 3 and 30 in an effort to asses all the problems faced by communities and looking for solutions to such problems.

In a statement the Ministry of Finance said the purpose of the IPRSP is to enhance Government efforts in fighting poverty in Zim-babwe and to ensure inclusive growth, guided by the coun-try’s national development plan ZimAsset.

“The IPRSP will therefore focus on practical and well-targeted measures that can be imple-mented in the short to medium term, with long lasting impacts that guarantee improvement in

citizenry welfare.

“The strategy is also expected to facilitate the re-engagement pro-cess with the international finan-cial institutions and co-operating partners which is a key in financ-ing the country’s developments processes,” said the ministry.

The event is expected to be attended by Government depart-

ments, civil society, academia, business organisations, commu-nity based organisations, youths, women, labour organisations among others.

The core principles of an IPRSP are that it should be country driven, promoting national own-ership through participation by all stakeholders.●

Finance ministry starts work on IPRsP

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HARARE- Zimplats says it has spent at least $448 million of the project budget on Phase 2 of expanding its Ngezi Mine in the Midlands province as at March 31 this year.

Initiated in 2010, the expan-sion project entails develop-ment of a 30 000 mega litre dam, a new underground mine, an additional con-centrator as well as other related infrastructure.

Zimplats, a subsidiary of South African firm Impala Platinum, said progress had also been registered on the refurbishment of its Selous metallurgical complex and base metal refinery.

Re-development of the Bimha Mine, closed in 2014 follow-ing an underground col-lapse, remained on schedule to reach full production in April 2018.

“The implementation of the

Ngezi Phase 2 expansion pro-ject is progressing well and a total of US$448 million of the project budget had been spent as at 31 March 2016,” Zimplats said in an update.

“A total of $13,6 million has been spent on the refurbish-ment of the Selous Metal-lurgical Complex base metal refinery project and $9,5 mill ion was committed as at March 31, 2016.”

The base metal refinery is being refurbished in line with a government push for local beneficiation and value addition.

Zimplats however said some capital projects that were planned to be imple-mented in the nine months to 31 March this year were deferred to future peri-ods due to cash constraints arising from decline in prices of soft metal on the world market.

One of the deferred projects include the base metal refin-ery, which was expected to be commissioned this July, but has been delayed as the drop international metal prices hit on Zimplat’s ability to fund the programme.

“The project has been deferred as a result of cash constraints and the com-missioning will now depend on the availability of cash,” Zimplats chief executive Alex Mhembere told a media and analysts briefing early this year.

Zimbabwe has the second largest known deposits of platinum in the world after neighboring South Africa. There are three mines extracting the mineral in the country namely, Zimplats, Mimosa and Unki.

Platinum accounts for about 36 percent of the country's total mineral production.- New Ziana.●

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HARARE -The State Pro-curement Board (SPB) on Wednesday said it will review all tenders in the electric-ity sector that the previous board awarded.

SPB board member Davidson Norupiri said the new board would review tenders that the axed Charles Kuwaza-led executive awarded.

“Those are some of the chal-lenges of trying to rectify or finding what might have transpired during the time of the other board which was there,” he said.

“We are seeing and respect-ing the deliberations going on and I strongly believe that with your support we will be in a position to scruti-nize and handle these things in a new way.” he said.

The Parliamentary Portfo-lio Committee on Mines and Energy chaired by Masvingo Urban legislator Dr Daniel

Shumba queried why the SPB stood by as tendering pro-cesses were being flouted.

The Committee also accused the SPB of being biased by awarding a tender to supply electricity transformers to the highest bidder.

“This is where you are com-promising the integrity of the SPB; the lowest to spec should have been awarded,” said Dr Shumba.

The Committee heard on Tuesday that the SPB uni-laterally awarded a tender to technically non-compli-

ant Helcraw Electrical (Pvt) Ltd because it charged $92 million against a recom-mendation by the Zimbabwe Power Company to award it to technically- compliant Pito Investments that had charged $120 million for the emergency diesel power plant in Mutare.

Bidders for the Mutare Peaking power plant also appeared before the commit-tee on Tuesday and accused the SPB of favoritism.

Zetdc officials also appeared before the committee earlier on Wednesday saying they

had been directed by the Minister of Energy not to procure transformers needed for the plant from independ-ent suppliers but a sister company, Zent which then failed to fulfi l l the order.

The ZETDC officials said they had re-engaged tender win-ners Pito Investments to sup-ply the required transform-ers needed for the Mutare Peaking plant.

“We were instructed to buy from Zent, our sister com-pany to improve group syn-ergies but their transform-ers were not satisfying our requirements,” said ZETDC managing director Chinem-biri.

He said ZETDC would want the tender to go through before the end of the year.

“We would want that tender to go through because we have shortage of transform-ers,” he said.-New Ziana●

sPB to review electricity sector tenders

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Dr Daniel Shumba

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HARARE -The bul l ish run on the Zimbabwe Stock Exchange cont inued today as the mainstream industr ia l index rose for a seventh consecut ive day after a 0.61 gain to sett le at 102.75.

Beverages giant Delta and TSL both advanced by $0,0100 to c lose at $102,75 and $0,1450 respect ively, whi le Proplast ics improved by $0,0025 to $0,0275 and cement producer PPC put on $0,0011 to $0,6500.

Barc lays a lso gained with a 0,0008 jump to $0,0295.

Giant insurer Old Mutual was the only counter trading in the negat ive terr i tory after los ing $0,0424 to trade at

$2,2026.

The mining index was f lat at 20.16 as a l l the mining

counters maintained pre-vious pr ice levels - BH24 Reporter ●

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Industrials in 7th consecutive gain

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MovERs CHANGE ToDAy PRICE UsC sHAKERs CHANGE ToDAy PRICE UsC

PROPLASTICS 10.00 2.75 OLD MUTUAL -1.88 220.26

TSL 7.40 14.50

Barclays 2.78 2.95

DELTA 1.55 65.25

OK ZIM 0.24 4.11

PPC 0.16 65.00

INDEx PREvIoUs ToDAy MovE CHANGE

INDUSTRIAL 102.14 102.75 +0.61 points +0.60%

MINING 20.16 20.16 +0.00 POINTS +0.00%

17 ZsE TABlEs

ZsE

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stock Exchange

Previous

today

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19 DIARy oF EvENTs

The black arrow indicate level of load shedding across the country.

PowER GENERATIoN sTATs

Gen Station

25 April 2016

Energy

(Megawatts)

Hwange 509 MW

Kariba 459 MW

Harare 30 MW

Munyati 18 MW

Bulawayo 22 MW

Imports 0 - 400 MW

Total 1494 Mw

• 29 April - CBZ AGM; Place: Stewart Room. Meikles Premier Hotel, Harare; Time: 15:00pm

• 05 May - Barclays Bank of Zimbabwe AGM; Place: Meikles Mirabelle Room; Time: 1500hrs• 18 May - ZB Building Society AGM; Place: 21 Natal Road, Avondale, Harare; Time: 12:00hrs

• 18 May - The 76th AGM of Astra Industries Limited; Place: Auditorium at Astra Park, Corner Ridgeway North/Northend Roads, Highlands, Harare; Time: 12:00hrs

• 19 May - The Fifth Annual General Meeting of Padenga Holdings Limited; Place: Royal Harare Golf Club, 5th Street exten-sion, Harare; Time: 08.15am

• 19 May - NMBZ AGM; Place: Unity Court, Corner 1st Street Kwame Nkrumah Avenue; Time: 10:00am

• 19 May - Turnall Holdings AGM; Place: Jacaranda Room, Rainbow Towers; Time: 12:00

THE BH24 DIARy

wAsHINGToN - The World Bank is delaying approval of further development loans to Mozambique pending a debt sustainability analysis to be conducted with the Inter-national Monetary Fund, a spokesman said on Wednes-day.

The IMF said last week Mozambique had admitted to having more than $1 bill ion of undisclosed debt and that the two parties were evalu-ating the implications of the disclosure.

"Processing of investment lending currently continues, while further approval of development policy loans is delayed pending the DSA and the analysis of macro-eco-nomic stability by the IMF and the World Bank," the World Bank spokesman said.

"Following the DSA, a deci-sion will be made on the vol-ume of World Bank support to Mozambique."

Prior to last week's IMF statement, a source at the Fund had told Reuters that

Mozambican firm Proindicus, owned by the interior and defence ministries and the state security services, had been lent $504 million by Credit Suisse and $118 mil-lion by Russia's VTB.

Another loan of $535 million had gone to Mozambique Asset Management, a state company set up to build a shipyard in the northern city of Pemba, that source said.

Mozambican government spokesman Mouzinho Saide said Maputo had granted a $622 million loan guarantee to Proindicus in 2013, and $535 million to Mozambique Asset Management the fol-lowing year.

This was meant to protect strategic national infrastruc-ture and help maintain naval equipment, Saide said after a cabinet meeting.

The loans are in addition to an $850 million 'tuna bond' issued in 2013 and restruc-tured last month because the southeast African nation was struggling to meet repay-ments.

The IMF source said the extra borrowing had pushed Mozambique's foreign debt to $9,64 bill ion, a level "very close to unsustainability". - Reuters.●

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World Bank delays aid to Mozambique pending debt analysis: spokesman

Gold got a surprise lift from Haruhiko Kuroda after the Bank of Japan gover-nor opted against boosting stimulus in a decision that battered the dollar and put prices on course for the longest run of gains in more than 11 weeks.

Bullion for immediate deliv-ery rallied as much as 0,9 percent to $1 256,59 an ounce, the highest level since April 21, and traded at $1 254,34 at 2:57 p.m. in Singapore, according to Bloomberg generic pricing. Before the BOJ’s decision, gold had been as much as 0,6 percent lower, and the BOJ’s unexpected move to stand pat spurred a gain of more than $10 an ounce in a few minutes.

Gold has risen 18 percent this year, partly as central bankers in Japan and Europe deepened stimulus in an effort to kick start growth, and also as investors scaled back expectations for US rate increases.

The BOJ decision to hold off went against the fore-

casts from a slight major-ity of economists surveyed by Bloomberg, who’d pro-jected additional action. The Bloomberg Dollar Spot Index fell as much as 1 percent, the biggest drop since March 17, as the yen rallied.

“A weaker dollar index, due to a stronger yen, as the BOJ decided not to introduce more stimulus at its board meeting today has provided support to gold prices,” Vyanne Lai, an economist at National Australia Bank Ltd., said by e-mail. “It appears

that the BOJ is preferring to take some time to assess the effectiveness of the nega-tive interest rate introduced three months ago.”

• The Federal Reserve on Wednesday left its bench-mark rate unchanged for the third meeting since starting a tightening cycle in Decem-ber, in line with expecta-tions, and policy makers reiterated that rate increases will be gradual.

• Holdings in exchange-traded funds backed by gold

rose 1,6 metric tons to 1 755,6 tons on Wednesday, data compiled by Bloomberg show.

• Bullion of 99,99 percent purity advanced 0,5 percent to 261,95 yuan a gram ($1 257,53 an ounce) on the Shanghai Gold Exchange.

• Spot silver climbed 0,5 percent to $17,3580 an ounce.

• Platinum rose 0,4 percent, while palladium was little changed. - Bloomberg●

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Gold powers higher as BOJ's surprise inaction hurts the dollar

By stephen Grenville

The last decade hasn’t been kind to economists’ egos. Almost no-one saw the 2008 crisis coming. The subsequent recovery has been ‘too slow for too long’. And, at a deeper level, there is widespread discontent with the way the middle class has been left behind while a tiny fraction is enjoying a repeat of the ‘gilded age’.

Thus economics seems to be in need of root-and-branch rethink-ing. The tried-and-true mac-ro-economic policies that should have ensured a rapid recovery after 2008 are inadequate, with monetary policy resorting to distortionary settings of interest rates and exploring policies (‘hel-icopter money’) that speak more of desperation than rational anal-ysis. Fiscal policy has been left on the sidelines by a combination of fixation with debt and far-fetched academic theories designed to support doctrine rather than recovery.

This reappraisal has been

underway for some time. On macro-policy, the International Monetary Fund has shifted a long way from its initial support for austerity, although it hasn’t much to offer other than the general mantra of ‘structural reform’. This falls on deaf political ears (‘We all know what to do: we just don’t know how to get re-elected after we have done it’).

Meanwhile there is the rise of structural explanations, each with its recommendations for change. Thomas Piketty’s analysis of the return to Downton Abbey has been overwhelmingly supported, but his solution of higher taxes has not. Larry Summers sees partial salvation in more infra-structure spending, but at the same time worries that entrepre-neurial dynamism is dead. Robert Gordon’s view is similarly dismal: the dynamics of the 1870-1970 century were driven by life-alter-ing innovation, which has petered out.

Stephen Cohen and Brad De Long add to this structural-focused analysis with Concrete Econom-

ics. They draw their lessons largely from the history of the US, described as ‘the place where economic policy has been, with-out a doubt, the most successful over the last couple of centuries’.

This book tries to remind us, in simple concrete terms, of how the American economy, again and again, was reshaped and reinvig-orated by a loveless interplay of government making broad eco-nomic policy and entrepreneurs seeking business opportunities.

In recounting the history of America’s economic success, they show that in each phase of development the government played a central role in giving broad direction, leaving it to private-sector entrepreneurs to innovate and experiment within the environment of incentives and constraints set down by the government. Each new phase had broad public support, with trade-offs, compromises, subsidies and division of the benefits deter-mined by the political process.

Some of the early history will be

of more interest to Americans than to others, but the post-WWII period from Eisenhower to Kennedy had such international influence that the narrative is broadly familiar to all. The progressive elements that Cohen and De Long advocate were all present. Administrations were prepared to take a major role in the economy.

Defence expenditure, running at 10 percent of GDP (twice the cur-rent level), was a major instru-ment in guiding private industry into areas that were seen as the most promising.

Government-funded infrastruc-ture (such as the national high-ways in the 1950s) opened up scale opportunities by reducing transport costs. Suburban hous-ing proliferated, epitomising the ‘good life’ and providing strong demand for home-improvement. Education expanded rapidly, and with it high-level university research.

There was very little doctrine driving these decisions. Prag-

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Rethinking economics: Cohen and De Long

matism and experimentation prevailed rather than dogma. The whole spectrum of policy tools was used: infrastructure development, tariff protection, direct picking and promoting of winners, exchange rate devalu-ation, and selective protection-ism through import quotas and ‘voluntary’ export restraints by trading partners.

The aim was not simply to direct resources according to compar-ative advantage, but rather to change America’s comparative advantage.

This environment produced a flood of high-technology produc-tivity-enhancing inventions.The authors see the last redesign of the American economy, beginning in the 1980s, as quite different; and inferior.

America allowed its manufactur-ing to be eroded by competition from East Asia, believing that the way ahead lay in a post-industrial world — the higher-value indus-tries of the future.

The government had no concrete

practical plans for this new era: just a doctrinal faith that dereg-ulation and free markets would deliver the right answer.

The pervasive doctrine of ‘the magic of the market’ was some-times beneficial (deregulation of airlines), but more often encour-aged resources to flow into areas of doubtful benefit for productiv-ity and living standards.

The prime example is the finan-cial sector, which doubled its share of GDP and put the best-and-brightest into innumerable variations of re-packaging finance and trading, with no more benefit to society than a casino. The additional resources in finance didn't improve price discovery and investment allocation. And it all unraveled in the 2008 crisis.

Finance is not the only example. America’s litigious society means its best brains arm-wrestle each other. A market-based health system accounts for 17 per-cent of US GDP (compared with 11-12 percent in most advanced economies), weighed down by top-heavy, paper-shuffling

administration. The pre-2008 real estate boom was a bonanza for those who organised the transactions, the real estate agents and lawyers. Certainly, there are winners: there is no denying the success of Silicon Valley and Hollywood. But these industries are too small and too specialised to provide jobs for the blue-collar and clerical middle class, displaced by imports and technology.

Where do the strongly-diri-gist policies of the East Asian successes (Japan, Taiwan, South Korea, Singapore and now China) fit into this narrative?

Cohen and De Long seem to see these as having many of the desirable attributes the authors advocate, although a key ingre-dient of these countries' success — a ready global market for exports — is not an option for all. But aren’t these successes coun-terbalanced by the failures of similarly-dirigist policies in Latin America, starting with Argentina, once counted among the richest countries in the world? It’s hard to identify generalities which

explain the diversity of the suc-cesses and failures.

Of course it is easy to find fault in this latest effort to pick apart what has gone wrong with economic policy-making. But each successive contributor to the debate — whether Piketty, Gordon, Summers or Cohen and DeLong — identifies three com-mon themes.

The pernicious influence of doctrine (and specifically the free-market ideologues); the insidious undermining of polit-ical consensus through income mal-distribution and the rise of politically-powerful vested inter-ests; and the misallocation of our best talent into finance, with so little apparent benefit to society. – The Interpreter ●*** Dr Grenville is a Visiting Fellow at the Lowy Institute for International Policy and works as a consultant on financial sector issues in East Asia. Between 1982 and 2001 he worked at the Reserve Bank of Australia, for the last five years as Deputy Gover-nor and Board member.

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