Henties council moves to resuscitate housing project
14 July 2020 | Local News
The Henties Bay council has initiated a legal process to ensure that a low-cost housing project in Extension 7 of Omdel is completed.
This follows a number of complaints by subcontractors against the project's main contractor.
Mahne Kruger, the council's strategic executive for economic development and urban management, said several notices were issued to its joint venture (JV) partner, Bay Construction, with no written feedback received.
“The council is aware of and sympathetic to the plight of the aggrieved subcontractors. Due process with regard to the JV agreement however needs to be followed. The municipality initiated a legal process as stipulated in the JV agreement and the way forward will be determined by the outcome of this legal process. We cannot pre-empt the legal process,” he said.
Kruger emphasised that the venture was a public-private partnership and no tender had been advertised. Under the agreement the municipality made land available and Bay Construction was responsible for constructing low-cost houses.
“Five houses have been completed. Bay Construction as JV partners are responsible for all losses on this project as per the agreement,” Kruger said.
According to Edward Yon, one of the subcontractors, he has suffered considerable financial losses due to the inability of Bay Construction to make payments.
Yon's company (Edward Yon Construction) is one of two subcontractors that entered into an agreement with Bay Construction, owned by Alvin Naidoo.
“My company and ISS Construction signed a contract with Bay Construction to build 27 low-cost houses at Omdel Extension 7 in Henties Bay in June 2019. The main contractor promised guarantees, which included the release of an advance payment on the percentage of the work done after 60 days,” Yon said.
He said Naidoo had assured them that money was available from the Development Bank of Namibia (DBN). “The main contractor and bank officials subsequently visited the site after 60 days. They conducted an estimation and valuation of the work rendered on 5 July 2019. Naidoo said he was only waiting on the bank to release funds in order for him to pay us.”
Yon said the payment was never made. “The reason provided by Naidoo was that the percentage of work done did not warrant any payment and therefore the money was not released. The construction of the houses stood at 30% according to a valuation conducted by Bay Construction.”
According to Yon, by that stage of the construction process he had already spent N$380 000.
“I used this money to purchase material. The establishment of the site, subsistence and travel allowance (S&T) and labour costs are excluded. Each of the ten homes my company was building was to be constructed at a cost of N$95 000 at a total cost of N$1.5 million. I am owed N$495 000 without interest calculated for the past 13 months,” he claimed.
Naidoo said telephonically from South Africa that he has been unable to return to Namibia because of the Covid-19 state of emergency. “Once I am back, I will handle matters. At this moment there is absolutely nothing happening at the site.” He said he had an attorney handling issues on his behalf.
“The contract clearly states that … the service providers would be paid on completion. None of the subcontractors completed the houses they were allocated to construct. They signed the agreement knowing that they did not have the capacity to deliver. I am now in tussle with the municipality,” Naidoo said. According to Yon, many subcontractors are falling prey to what he termed a “dodgy way of doing business” and lose millions in the process.
“I stopped the construction in July 2019 when I saw there was no payment forthcoming from the main contractor. The project is now at a complete standstill. We are worried because we learned through a reliable source that N$5 million was withdrawn on different occasions from the DBN account. This was the total cost for the construction of 100 homes. Yon was adamant that the municipality should terminate the contract with Bay Construction and hand it over to the subcontractors to complete.