Chinese 'favoured' in rail tenders

Players in the local construction industry are once again flabbergasted by the fact that lucrative tenders are being given to foreigners, which they say will not stimulate the already stagnant economy.

22 November 2019 | Business

The executive director of the ministry of works and transport, Willem Goeiemann, says no decision has been made about tenders for the upgrading of two sections of the Walvis Bay to Kranzberg railway line.

Robert Kalomho, the ministry's director of railway infrastructure management, concurred, saying an official publication of the tender awards, as required by the African Development Bank (AfDB) procedures, would be issued once the procurement process had been completed.

Nevertheless, people in the local construction industry are worried about rumours that two Chinese bidders are favoured for the projects.

It is understood that about 30% these projects will be funded through a N$10 billion loan facility from the AfDB. The Namibian government plans to spend N$3.3 billion on the rail projects.

The rail project will be done in two phases: the first between Arandis and Kranzberg, and the second between Arandis and Walvis Bay.

Qingjiang Group/Unik Construction Engineering (both Chinese companies) are reportedly earmarked for the Arandis-Kranzberg project, while China Gezhouba Group is said to be likely to get the Arandis-Walvis Bay contract.

The Unik joint venture is reported to have already gone to South African suppliers with a letter of award from the works ministry.

The Tender Bulletin of 2 – 8 August reported in an article headlined 'China champions Nam's choo-choo projects' that China Gezbouba was not initially mentioned as one of the 21 bidders when the tender closed on 10 October 2018.

Two of the 21 bidders were Namibian, seven were Chinese, two were joint ventures between Namibian and Chinese players, one was from Turkey, and two were South African companies.

The local players, who prefer anonymity for fear of reprisal, pointed out that neither Qingjiang/Unik nor China Gezhouba lists rail projects among their activities on their websites.

What is worse, they said, the Unik JV is apparently planning to outsource as much as 70% of the work to the South African company Aveng, which is inconsistent with the AfDB rules.

The AfDB rules stipulate that no more than 25% of a contract may be outsourced.

“It makes one wonder why this is allowed here in Namibia and if this is not a deliberate attempt to exclude local contractors from the entire process. There is no consideration for Namibian contractors,” a local player said.

It is rumoured that the works ministry simply decided to award the contracts to the lowest bidders.

However, questions have been raised about how Unik JV and China Gezhouba could have arrived at their asking prices.

It is alleged that Unik JV was able to bid 40% lower than the estimated budget of the consulting engineers, and about 50% less than the tender of the Turkish bidder, Yapi Merkezi.

Yapi Merkezi's asking price is said to be N$1.4 billion, and it is reportedly one of the best-qualified international contractors for railway construction.

Yapi Merkezi's bid was about 14% higher than that of JDC Consortium, which includes local company D&M Rail.

Unik JV apparently put in a N$720 million bid, which will have to include the construction of the railway, bridges and earthworks estimated to cost between N$400 million and N$500 million.

Aveng's estimated budget for the rail construction was about N$800 million.

“The only logical explanation is that this was pure ignorance and no local knowledge that allowed Unik JV to arrive at such a low price,” a local source said.

Unik JV has reportedly not made any enquiries about prices from the local rail sleeper manufacturers in Tsumeb, which fuelled rumours that it will source the sleepers from either South Africa or China.

“One can only assume that there will be minimal local procurement, and no stimulation of the economy that is in a stagnant phase.

“It is known that Aveng has mechanised much of its work, which replaces much of the labour. Job creation will therefore also be minimal.

“We are seriously wondering if job creation is taken into consideration by AfDB, which is integral in the award of the projects to the cheapest bidders,” a source said.

This source said because there are no new rail construction projects in South Africa, it can be assumed that Aveng will bring along its own fully trained staff.

“The question remains: are we forever going to be dependent on foreigners that do no skills transfer, as was the case with the construction of the northern railway line that was also done by Aveng?” one asked.


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