Govt paid its dues - Calle

Finance minister Calle Schlettwein has assured parliamentarians that the government has paid all its dues, dismissing a claim that service providers are owed N$1.2 billion.

Popular Democratic Movement leader McHenry Venaani recently demanded an explanation from the minister of finance regarding penalties paid for capital projects that were abruptly stopped because of the country's economic problems.

According to Schlettwein most of these projects were revised and refinanced.

“When fiscal consolidation was introduced in financial year 2015/16 and reinforced in financial year 2016/17, projects with no tender awards were postponed and such postponement did not carry financial, but economic costs in terms of benefits foregone,” Schlettwein said last week.

“For ongoing projects, most of them were slowed, mainly because some such projects were not fully provided for in the budget.

“The combination of budget over-commitments and rescheduling of project implementation contributed to the accumulation of unpaid invoices, in addition to those invoices which were not reported for budgeting purposes.

“The total amount of accumulated invoices, including those arising from the slowdown on projects and penalties, amounted to a total of N$2.1 billion which was successfully settled during 2017/18 financial year.”

Venaani also asked Schlettwein to give a breakdown of penalties incurred over the past three financial years.

According to Schlettwein cost penalties arising from capital project implementation arose as a result of several factors, including rescheduling of the project implementation, overpricing and project contract management issues.

“Some of these penalties and how they arose are still under investigation. The detailed breakdown of the penalties will be provided at later stage,” said Schlettwein.

Schlettwein also responded to Venaani's question on penalties paid to the Mass Housing programme, the bulk fuel storage facility and other major developments.

According to the finance minister the government had negotiated with 26 contractors whose initial claims amounted to N$628 million for the Mass Housing project.

“The government negotiating team negotiated a total reduction of the initial claim amounting to N$224 million. This figure reduced the initial claim by 36% in favour of the government.

“The total final settlement amounts from contractors totalled N$426 million and this mainly included claims for construction costs as well as additional claims for preliminaries and general costs attributed to standing time and interest on late payments,” he said.

Schlettwein acknowledged that there were additional costs associated with the fuel storage facility, but added that most of these were the result of exchange-rate fluctuation.

“It should be put on record that treasury had approved this tender in Namibia dollars. However, some public officials proceeded to include the United States (US) dollar component, which exposed the project to foreign exchange variations. “This matter is still under investigation. The other variation amount of N$198 million came as a result of an extension of time due to additional work that extended the project for six months from its original contract period. “Other costs arising from projects in the road and water sectors were addressed through refinancing arrangements with the Road Fund Administration and NamWater, thus avoiding further incurrence of penalties.”