Outstanding N$20 million halts work
14 November 2016 | Labour
The CEO of the Roads Authority (RA), Conrad Lutombi, confirmed that the parastatal received a notification of the suspension of work by the China Railway Seventh Group and Onamagongwa Trading Enterprises joint venture.
Lutombi said in accordance with the contract the joint venture has a right to suspend work on the project because of an outstanding invoice.
He said the RA and the joint venture will have a meeting this week, adding: “We will be able to resolve the matter.”
The joint venture had given a 21-day notice of its intention to suspend work on the road project in a letter written by the project manager of the Chinese company, Xianjin Wang, on 20 October when he informed the employer of a “possible delay” in the construction of the project.
Wang said payment was due on 21 September and again on 16 October, saying the late payments were having an effect on the contractual production output and planning.
“It is imperative that a positive cash flow is maintained on the project to allow the contractor to maintain a planned level of production and resource procurement for the successful completion of the project,” Wang wrote.
He said the delay in production is due to late delivery of materials caused by late supplier payments, as well as losing trust with suppliers related to settlement agreements that have not been honoured.
Wang wrote that plant and equipment imported were also impounded by customs at the Walvis Bay harbour due to import duties and taxes that the joint venture was not able to pay as a result of “morbid cash flow”.
A managing member of the Onamagongwa Trading Enterprises, Martyn Ipinge, on 8 November wrote to a supplier of the impending suspension that would start on 11 November, and added that the RA had failed to honour its monthly contractual obligations.
“It is unknown as to the duration thereof and to whether the joint venture shall cease all works or continue with minor works; this will be formalised in the next few days,” Ipinge wrote.
Ipinge would not comment on the matter when contacted.
Lutombi did not expound on the reasons why the RA had failed to honour its contractual obligations.
According to the payment schedule the RA has paid over more than N$106 million to the joint venture. The outstanding payment is close to N$20 million.
China Railway Seventh Group, which holds 80% shareholding in the joint venture and which states its vision as enhancing “the quality of life of all our people”, had recently in an advert stated that it has commenced work on a bridge and road at Frankie Frederick Street in Prosperita.
It stated construction on this part of the project would start on 21 September until 30 February next year.