Concerns have been expressed about international companies – particularly Chinese corporations – this week being awarded the lion’s share of 4 contracts valued at R17.4 billion that the SA National Roads Agency (Sanral) cancelled earlier this yr.
Read:
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The SA Forum of Civil Engineering Contractors (Safcec) has additionally expressed concern that the rules of equity and competitiveness weren’t met in awarding these contracts.
However, building trade associations and stakeholders have confused the want for South Africa building companies to be aggressive towards worldwide rivals.
On Thursday Sanral introduced that it had this week awarded 4 of the 5 beforehand cancelled tenders following an analysis course of by the Development Bank of Southern Africa (DBSA).
The following venture awards have been made:
- Mtentu Bridge: R3.428 billion to CCCC MECSA Joint Venture (JV).
- R56 Matatiele rehabilitation: R1.057 billion to Down Touch Investments.
- Ashburton Interchange: R1.814 billion to Base Major/CSCEC JV.
- EB Cloete Interchange Improvements: R4.302 billion to Base Major/CSCEC JV.
The worth of every venture award is similar to the lowest tender value obtained earlier than these tenders had been cancelled.
Sanral has not but responded to a Moneyweb request for additional particulars about the three way partnership companions and tenderers.
However, it seems that:
- CCCC is the China Communications Construction Company Ltd – a majority state-owned, publicly traded, multinational engineering and building firm.
- CSCEC is the China State Construction Engineering Corporation, which is thought to be the largest building firm in the world.
- Base Major was registered in South Africa in 2007 and based by Chinese businessman and firm director Stephen J Lu.
- MECSA is Mota-Engil Construction South Africa: wholly-owned and managed by 100% black-owned diversified firm CN Holdings Company (Pty) Ltd.
Safcec CEO Webster Mfebe mentioned South African contractors take part and win bids throughout the globe on the foundation of the relevant laws that governs procurement in these nations.
Mfebe mentioned no person may have any qualms about these Sanral awards so long as the profitable bidders met the necessities of the Constitution, which requires that when a organ of state contracts for items and providers, it should accomplish that in accordance with the rules of equity, equitability, transparency, competitiveness and price effectiveness.
He mentioned these identical necessities are repeated in Section 61 of the Public Finance Management Act (PFMA). If any of these 5 procurement pillars in the Constitution should not met, the awards stand to be challenged by whomever has been affected by it, he added.
Mfebe mentioned it took lower than three months for contractors to organize their bids for the cancelled initiatives after they had been re-advertised for just one month.
The precept of competitiveness and equity can’t on this foundation be considered as having been met as a result of new gamers would have had just one month to organize good high quality bids, he mentioned.
Mfebe mentioned the re-advertisement of the tenders would additionally unfairly drawback bidders who had beforehand submitted bids as a result of their costs for these initiatives could be identified, which might have an effect on the competitiveness of the tenders.
“Those issues have contaminated the five pillars that are enshrined in the Constitution,” he mentioned.
Meanwhile, Black Business Council in the Built Environment (BBCBE) CEO Gregory Mofokeng mentioned it’s a concern that the tender awards have been dominated by worldwide companies, however confused that the council must carefully examine the bids to find out what number of native companies tendered for these alternatives and the pricing of their bids relative to the Chinese companies.
He additionally confused the significance of bids from native companies being aggressive.
Mofokeng mentioned the awards is not going to solely have a optimistic influence on employment in South Africa but additionally help the nation’s materials producers and suppliers and localisation technique.
He mentioned the BBCBE could be speaking with Sanral to make sure these Chinese companies didn’t import all or the bulk of their materials for these initiatives from China.
“It will certainly even be a no-no for them to import labour. We are going to limit the Chinese to importing these abilities that the nation has already determined are scarce abilities.
“From a black business perspective we are also looking forward to seeing what targets apply to these projects and looking closely at to what extent the black players will be supported, because we still have a developmental agenda [in South Africa] whether it’s a local or international player,” he mentioned.
E-toll confusion
The fifth cancelled tender – regarding the Open Road Tolling tender for the Transaction Clearing House operator for e-tolls on the Gauteng Freeway Improvement Project (GFIP) – has not but been awarded.
Sanral mentioned: “In light of the recent announcement by the Minister of Finance ‘to scrap e-tolls’, a decision on the Open Road Tolling tender (TCH Operator) has been put on hold pending clarity on key issues.”
Read:
Confusion over how a lot Gauteng should pay Sanral to settle e-toll debt
Government passes the e-toll ‘hot potato’ to Gauteng authorities
Record time
Sanral has been applauded for adjudicating and awarding the tenders in document time.
Sanral had nonetheless indicated in June 2022 that the anticipation was that the tender awards for the 5 cancelled initiatives could be made by September 2022. Construction trade associations and stakeholders had expressed critical doubts that this deadline could be met.
Read:
Former Sanral boss doubts cancelled tenders might be re-awarded in 4 months
Sanral underneath stress to award R17.4bn in cancelled tenders by end-September
The failure of Sanral to fulfill this deadline was attributed to requests by the bidders for an extension of time to submit bids.
However, Mfebe believes it’s “an unprecedented miracle” that tenders for multi-million rand infrastructure in South Africa have been adjudicated and awarded inside a month.
“This is a standard that has not even been achieved in ordering school books in this country. South Africa needs to be placed in the Guinness Book of Records [for achieving this],” he mentioned.
Mofokeng added that the BBCBE too is blissful the initiatives have lastly been awarded.
Sanral board chairperson Themba Mhambi expressed his honest due to the DBSA for enterprise the analysis of the beforehand cancelled tenders and their adjudication, as nicely for the speedy method wherein the course of was resolved.
Mhambi mentioned Sanral can be deeply grateful to the trade for his or her persistence in re-submitting tenders for these contracts and ready for the adjudication course of to be concluded.
He mentioned there was understandably a priority by the government when the tenders had been cancelled, about the influence it could have on South Africa’s infrastructure improvement agenda.
Listen: Safcec’s Webster Mfebe on the influence of Sanral’s tender saga on the building trade
“We accordingly undertook to each President Cyril Ramaphosa and Transport Minister Fikile Mbalula that we’d do every thing attainable to make sure that we mitigate the influence on the building trade and the economic system.
“And that meant re-advertising, evaluating and awarding the tenders inside 4 months after they had been cancelled.
“We are happy that we have lived up to that commitment and in the process learnt valuable lessons about how to handle tenders with speed to keep the country’s economic development on the boil,” he mentioned.
Mhambi mentioned Sanral will proceed to prioritise infrastructure improvement in driving South Africa’s financial restoration.
He mentioned that whereas this course of has delayed the implementation of important infrastructure upgrades, it must be balanced towards wholesome governance and the want to make sure compliance with all related procurement and authorized prescripts when Sanral awards any and all tenders going ahead.
“Our congratulations go out to the successful bidders, and we look forward to seeing the true impact of these projects in the lives of the road users and communities we serve,” he added.
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