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Zambia government through the ministry of Communications and Transport is set to lose close to K1 billion following the failure to abide by contract agreed terms with Albion Export Services Limited of the United Kingdom.
According to the Auditor General’s report obtained by QFM,this is in relation to the contract entered into on 30th November 2009 by the ministry of communication and supply and the UK firm for supply of seventeen Titan Airport Fire Fighting Vehicles and nine Iveco Trauma Ambulances at a total contract sum of K124.7 billion.
The terms of the contract, among others, were that the ministry was to effect full payment of the contract price in one installment on or about 15th January 2010, and in the event of the ministry defaulting in making payment to the seller for a period in excess of six months, the seller would be entitled to treat 5% of the amount received from the buyer as forfeited to the seller.
The report indicates that the manufacturing of the vehicles was to commerce immediately upon receipt of full payment, with delivery of the vehicles to Lusaka expected between July 2010 and February 2011 provided payment was received before December 2009.
However contrary to the terms of the contract which required a full payment to have been made on or before 15th January 2010,the ministry only paid K19.8 billion on 24th November 2010,eleven months after the contractual deadline.
The payment made represented only 16% of the contract price, consequently, should the supplier enforce the terms of the contract, the ministry will lose K990 million, being 5% of the amount paid.
It was also established that the signed contract document did not have a clause requiring the supplier to provide a guarantee such as performance bond as a prerequisite to the contract.