Corona bites fuel facility

The project cost has escalated by billions and the deadline for completion is now apparently indefinitely extended.

13 March 2020 | Infrastructure

The completion of government's N$5.5 billion national fuel storage facility at Walvis Bay is being held up because the Chinese contractors returned to China for their new year and are now stuck there due to the outbreak of the coronavirus.

The minister of mines and energy, Tom Alweendo, yesterday said at a press briefing that the facility, which was supposed to have been finished in February, was “99%” complete but the completion date was now uncertain.

The storage facility was being built by a company called CBR, a joint venture between China Harbour Engineering Company (CHEC), the Roads Contractor Company (RCC), and a privately-owned Namibian company, Babyface Civils of Vaino Nghipondoka.


The project has been shrouded in controversy almost right from the start, when the National Petroleum Corporation of Namibia (Namcor) initiated it in 2010.

By then, in 2010, Namcor had already finalised a design and had finalised a prequalification of tenders. The project cost was estimated at N$800 million and it was to be built over a two-year period.

But the project faltered and when it was resuscitated in 2013, the budget had inexplicably ballooned to N$3.7 billion, which again rose to N$4.5 billion in 2014, and later to N$5.5 billion.

Another N$50 million is still to be added to the cost for a firefighting station.

By 2014 the project was supposed to be finalised within three years. The deadline was later extended to the middle of 2017.

Alweendo said the price had escalated because the design was changed. A new jetty had to be built at an additional cost of N$2.7 billion. The new firefighting station is said to replace an “obsolete” one on the old jetty.

The tender price was also exposed to foreign currency fluctuation because 80% of the tender price was given in unhedged US dollars. This matter was subject to an Anti-Corruption Commission (ACC) investigation, which came up inconclusively.

But the plot kept on thickening when the erstwhile Tender Board chaired then by finance executive director Ericah Shafuda agreed that more land was required for the facility. CHEC, the Chinese contractor on the project, had first recommended to Namcor to buy an additional 5 000 square metres of land on which the tanks were to be placed.

The twist in the tail is that CHEC was the owner of the land, which it had offered at N$23.3 million - which at the time was three times more than the market value of N$9.3 million.

CHEC had bought the piece of land a month after it was awarded the fuel storage facility contract.

Cabinet last week instructed the mines ministry to conduct a technical evaluation to gauge whether the tank heights are commensurate with the size of the land, and to find out the process and manner of the “mismatch”.

The investigation is also to ascertain if there was a breach of confidential information, suggesting that the Chinese firm may have had inside information which brought about its purchasing of the land.

Cabinet also directed the mines and finance ministries to seek an adequate valuation of the land to ensure that a proper market-related price is to be paid.

'The biggest lesson'

Alweendo, who was the chairperson of ministerial committee tasked to oversee those who implemented the project, yesterday said the “biggest lesson” learnt from this was this: “We should probably have taken more time to really understand the scope of the project and not to continue adding items as we went along. The timing of three years maybe probably was not right. If we had spent more time to understand the scope of the project, we may have saved time and probably also money.”


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