RA turns down RCC merger …as government mulls closure

20 September 2019 Author  
The Roads Authority (RA) has declined a government proposal to merge its operations with that of beleaguered government-owned contractor, Road Contractor Company (RCC), sources have revealed.
According to information gathered, the Roads Authority argued that the merger of the two entities would not prove beneficial to its operations and thus countered the government proposal by offering to commit road maintenance works valued at N$288 million to the company.
The RA road maintenance contract offer, which is conditional for five years according to insiders, is aimed at avoiding any further efforts to push for the merger of the two by government, which finds its self weighed down by a company saddled with total liabilities of N$910 million.
According to terms of the RA contract offer, the RCC will be required to submit an annual performance report on works carried out and no joint ventures shall be permitted for any of the works allocated, as the company has the prerequisite capacity.
The Roads Authority conditions stem from a previous agreement where the RCC was awarded contracts by the RA and accused of carrying out substandard work after it sub-contracted other companies, especially Chinese firms, to work on tenders awarded.
The RA even went as far as dismissing the proposal by noting that any proposed merger of the two entities, will violate the RA’s Act, Section 3, which states the RA shall not undertake any road construction or maintenance and that such works can only be carried out by outside contractors.
In a twist to the RCC rescue plan, August Twenty Six Construction, a ministry of Defence linked company, has expressed its interest in merging only with RCC’s Road Maintenance Department.
The move which has been described as opportunistic by insiders, as the offer only applies if the RA continues to allocate road maintenance works to RCC.
The revelations come as government, through the Cabinet Committee on Treasury has been making frantic efforts to try and save the company, which is on the brink due to maladministration which has taken place over several years.
This comes amid reports the company’s management and staff have racked in millions by creating companies and awarding them joint venture contracts with the RCC, in some cases using the equipment owned by the government entity to implement the contracts.
This comes as it emerged governments initial move, which had the cabinet committees blessings, to push for the closure of the company could not be implemented after a legal opinion from the Attorney General’s office revealed that the existing RCC Act, particularly section 12, prohibits the winding up or placement of the company under judicial management without the authority of an Act of Parliament.
To circumvent the restrictions of the existing RCC Act, insiders state that the Attorney General has recommended that the minister of works, under whose ministry the company falls, takes the route of a Government gazette, through a Roads Contractor Company Judicial Management or winding-up Bill of 2019.
Any possible closure of RCC threatens the lively wood of its 291 staff members or which 20 are managers, with the retrenchment exercise expected to costs the company N$70.97 million.
In July, the government was forced to step in to save the sale of the RCC head office by Bank Windhoek, which sought to recover a N$100 million debt from the company.
 

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