Namcor splashes N$68m on ‘misfiring’ software system

The National Petroleum Corporation of Namibia (Namcor) has paid N$68 million for an organisational operations software system that is not fully functioning.

Namcor awarded a software system tender in January 2020 to Green Enterprise Solutions to supply, install, implement, test and commission an enterprise resource planning (ERP) system.

This is a software system used by organisations to manage day-to-day business activities.

Documents in possession of The Namibian show that the price of this software system tender escalated from N$23 million in 2020 to N$68 million in May 2023.

This price is expected to increase, with Namcor planning to spend another N$14 million by March this year.

This is according to an Excel spreadsheet prepared by Namcor’s Department of Information and Communication Technology (ICT).

The move has irked staff members, with concerns being raised of higher spending on a malfunctioning system.

Namcor’s acting managing director, Shiwana Ndeunyema, last month confirmed that the transaction is part of a wider investigation into the operations of the company.

“The management has initiated a cross-cutting investigation on the Namcor operations that is inclusive of this ERP system, and if any foul play is found, the necessary action will be taken as per company policies,” he said.

An Excel spreadsheet seen by The Namibian shows over 70 complaints from employees in several departments at Namcor.

These complaints, made since May 2022, include grievances over incorrect payments due to the software system.

They also involve oil depot users being unable to amend order quantities when there is a gain, and notifications not going through to specific users, resulting in difficulties separating sales update batches per company.

“All these batches need to be approved on a daily basis. If batches are not approved, we will encounter discrepancies with transactions,” the complaint of one Namcor employee in the spreadsheet reads.

Other issues raised include pricing, trading budget not loaded, sales volume by customer, sales volume by customer and per product, as well as budget hold release warning messages.

Documents show that 13 companies competed for the tender.

Namcor’s suspended managing director, Immanuel Mulunga, signed the contract in December 2021, alongside Green Enterprise Solutions’ chairperson, Llewellyn le Hane.

Mulunga on Monday said he was not aware of the challenges.

“I have been on suspension since April 2023, so I am not aware of these challenges. The correct people to ask is the current leadership of Namcor,” he said.

According to the contract, phase one of the project should have been completed on 10 January 2022.

Green Enterprise Solutions’ managing director, Kehad Snydewel, has denied any wrongdoing.

He claimed there was no price escalation, despite The Namibian being in possession of evidence contradicting his claims..
Snydewel last month directed questions to Namcor.

“We successfully implemented the ERP implementation within the time frame stipulated in the original tender document,” he said.

THE CONTRACT

The award took a blow when rival bidders New Point Electronic Solutions and Virtual Technologies objected to the tender.

Virtual Technologies argued that Green Enterprise Solutions has not completed any project of the same magnitude as this tender.

The company further claimed that Green Enterprise Solutions’ bid was inferior to theirs on pricing and on the technical competencies.

“We have been advised that public funds ought to be accounted for and public institutions are expected to justify costly expenditure in the face of less costly alternatives,” Virtual Technologies chairman Toivo Katuta said in court documents.

New Point Electronic Solutions said Namcor sent out the notice of award to bidders to the wrong email address.

It also said the tender price stated in the tender document at the opening of the bids differs from that in their notice of award.

“Any change in pricing should have been communicated to all bidders,” New Point Electronic Solutions argued in their affidavit.
The Ministry of Finance and Public Enterprises’ review panel ruled for the readvertisement of the tender.

In its findings it said Namcor acted contrary to the regulations of the Public Procurement Act by setting up an evaluation committee eight days after the bid’s closing date.

But Green Enterprise Solutions took the matter to the High Court in an attempt to overrule the review panel’s decision in October 2021.

The High Court then ruled in favour of the company by setting aside the panel’s decision, with a directive that Namcor proceed with the tender.

PROBE

Ndeunyema says part of the parastatal’s wider investigation is the payments of the tender.

He says after the High Court order, Green Enterprise Solutions presented a price increase to Namcor.

Ndeunyema says this increase was due to a 25% annual rise in Oracle’s software licence, support prices, as well as fluctuations in the exchange rate between the United States dollar and the Namibia dollar between 2020 and 2021.

He says staff movement, retrenchments, and Covid-19 further contributed to the price changes, which have impacted implementation and training costs.

“The initial price has changed from N$23 million to N$38 million, excluding disbursement costs, implementation costs and software licences for phase 2, which later amounted to N$68 million (exclusive of VAT) by May 2023,” Ndeunyema says.

“I am confident in the ongoing investigation, and payments related to this particular ERP system have been halted since May 2023. We are awaiting the results of our investigation before proceeding with any further transactions related to the ERP system.”

Namcor’s board chairperson, Jennifer Comalie, says the board is aware of the escalated costs of the software system.

“The ERP system is fairly functional. I am confident that if there are any other matters of this nature, they are being handled thoroughly, as payments related to this particular ERP system have been ceased by the interim managing director as soon as he took over in May 2023,” she says.

Namcor’s ICT head, Bonifatius Konjore, has declined to comment on the matter.

“I can’t comment, because we are not allowed to speak to the media,” he said.