THE Harare City Council (HCC) is wasting US$300 000 per month on water treatment chemicals from third-party suppliers, despite having a standing contract with South African Nanotech Water Solutions, which was paid over US$1 million in 2022.
This unnecessary expenditure, amounting to US$3,6 million annually, could have been avoided if the council had stuck to its contract with the South African firm.
Harare municipality signed the US$5,4 million contract with Nanotech in 2019 but the local authority has reneged.
This is contained in HCC audit documents, which show how the council officials are allegedly squandering ratepayers’ money through questionable procurement deals.
Now, Nanotech is threatening legal action against the council to enforce the obtaining contract for the water treatment chemicals.
The Zimbabwe Independent understands that the city could save about US$300 000 per month from the US$3 million it spends on water treatment chemicals if the Nanotech project is completed.
Prior to awarding the tender to Nanotech, Harare City Council had commissioned the South African firm to conduct tests on the quality of its water.
Results released in 2020 indicated that the city was supplying water contaminated with toxins that could potentially cause liver and central nervous system diseases.
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But an audit into Harare City Council’s operations revealed that Nanotech Water Solutions was considering legal action against the local authority for allegedly negotiating new contracts while the US$5,4 million water treatment deal was active.
There is a raging dispute as council demanded that Nanotech provides acquittals for the initial US$1 million payment before the project’s completion.
The contentious water treatment project has been one of the focal points of the Commission of Inquiry set up by President Emmerson Mnangagwa in May to probe the city’s affairs.
Documents reviewed by the Zimbabwe Independent show that Nanotech insists that acquittals could only be submitted only after the project was finalised as per their agreement.
According to an audit report prepared by HCC audit manager Archibald Nyamurova on July 24, Nanotech has threatened legal action if council continues to engage third parties for similar services despite their existing contract.
“The main notable finding is that an impasse arose between the city’s finance personnel and Nanotech Water Solutions over the issue of the acquittal of the amount of US$1 068 013,51 advanced to Nanotech Water Solutions,” the audit said.
“On 6 May 2024, Nanotech attorneys Richard Attorneys wrote to the City of Harare that it had come to their attention that the city had been engaging alternative third parties to provide similar services as disclosed and protected in terms of the memorandum of agreement signed with them.
“They said they reserved the right to institute legal proceedings if the city continues to negotiate with alternative suppliers. This averment if true, then audit cannot rule out possible wilful sabotage to Nanotech,” excerpts from the audit report read.
The audit’s terms of reference were to assess the performance of the agreement between Nanotech and Harare City Council regarding the supply, installation, commissioning, operation, and maintenance of chlorine dioxide water treatment technology.
Additionally, the committee sought to understand the status of acquittals submitted to the Reserve Bank of Zimbabwe concerning the funds advanced to Nanotech.
Initially, Harare City Council had planned to finance the project using devolution funds from the Ministry of Local Government and Public Works.
However, when this funding did not materialise, council resorted to self-financing the water treatment initiative.
“The City of Harare had anticipated funding for the project to come from the parent ministry as evidenced by a letter to the ministry dated 28 August 2020 wherein a request for financial support for the Nanotech project was made,” the audit report reads, in part.
“Financial support requested by the City of Harare from the Ministry of Local Government and Public Works for the chlorine dioxide water treatment technology project was not granted, thus the City of Harare resorted to finance the project through its own funds.’’
The audit also showed a series of correspondence from Nanotech requesting for additional funds after manufacturing chlorine dioxide generators and installing equipment at Morton Jaffray Water Works, but the local authority insisted on acquittals before disbursing more money.
“On 16 August 2021...Nanotech wrote a complaint letter stating that they had committed resources as far back as July 2020 for the manufacture of chlorine dioxide generators yet the City of Harare was showing lack of commitment by not paying as per the contract agreement,” the report reads.
“On 6 January 2022, Nanotech again wrote to the Town Clerk following up on payment. No action was taken in this regard…Nanotech again made a follow up regarding payments on August 2, 2022, nothing again was done.”
The audit pointed that the Harare City Council should understand that Nanotech’s agreement required the submission of acquittals only upon the project’s completion, particularly given the complexities involved in the contract’s offshore and local cost components.
The report reads: “Audit established that the work being done by Nanotech at Morton Jaffray is categorised under contracts with complex works.
“Some elements in this regard bear offshore costs which require bills of entry to prove importation of goods whereas the services aspect of local works, merely require the contractor’s invoice to acquit for themselves for payment received.
“Council therefore needs to appreciate that the acquittal by Nanotech consists of both aspects." In its recommendations, the audit urged the council to honour its contractual obligations.
“Council should consider honouring part of their bargain by going to the Reserve Bank with Nanotech to register a service contract as a way to resolve the issue of acquittals,” the audit further states.
“City of Harare should seriously consider the issue of wear and tear of machinery/equipment installed by Nanotech at Morton Jaffray water works," it said.
