Kata Investments ‘special’

31 October 2014 Author   Nyasha Francis Nyaungwa

Front Roads Authority 31 OctROADS Authority CEO Conrad Lutombi has defended the awarding of a N$100 million road rehabilitation tender to Kata Investments.

 

He said Kata Investments had been innovative by piggybacking on the experience and expertise of the construction company China State, one of the largest global players in the construction sector.

In an exclusive interview with the Windhoek Observer this week, Lutombi said the tender awarded to the joint venture between Kata Investments and China State fell into a category mainly reserved for international companies with a proven track record in road construction.

Ten companies had submitted bids for the tender to rehabilitate the 25 km road from Elundu and Eenhana.

Of the ten, six companies were Namibian, two were Chinese and the other two were joint ventures between Chinese companies and Namibian companies.

Lutombi added that by forming a joint venture with China State, Kata Investments made a smart move and that alone might have worked in their favour when the RA took the decision to award the N$100 million road tender.


“It’s an advantage because this tender went to a Namibian company teaming up with a foreign company. A foreign company has the expertise, the equipment and the resources and therefore that helps in building capacity.

“There is no point in giving a tender to a company that has not passed the technical evaluation. What it means is that you will find that this company is cheaper, but they cannot do the work because they don’t have the knowledge.

“When we looked at Kata’s evaluation we looked at the joint venture. The joint venture tells you what capacity you have. With the joint venture, you are putting all your resources into one pot and for us, we look at what is in that pot.

“China State has the money, has the equipment and that is what boosted them. If it was them (Kata) going alone maybe the situation would have been different,” he said.

Lutombi described as unfortunate recent media reports insinuating that the Roads Authority had influenced the outcome of two road tenders in favour of the company co-owned by President Hifikepunye Pohamba’s daughter Kaupumhote.

He said he was dismayed with the misrepresentation of facts about the awarding of the N$100 million tender to the China State/Kata Investments joint venture.

He added that he was also shocked with the way the media had pre-empted the outcome of a tender process in which Kata Investments had also tendered for a N$400 million road construction project.

“The articles insinuated that we gave a tender to Kata Investments because one of the shareholders is a child of the president. The other article created an impression that we were about to give another tender to Kata Investments of about N$400 million which was also not true.

“Such reports are not justified and are unfair. You cannot start talking about a tender that we have not awarded. In my opinion that is not right. People must wait and once everything is done they will know who got the tender,” Lutombi said.

Lutombi defended the Roads Authority’s tender process describing it as “very fair and transparent because of the process that we follow”.

“The first thing is that we advertise for people who are interested in tendering and in the advert we also include the tender rules, the job description and the profile of the work that needs to be done.

“The tenderers know what is required and what they must submit. After that, we go with the tenderers for a site meeting so that everybody has a fair opportunity and everybody receives similar information about the project.

“Thereafter we come to the closing date, and when we open the tender we call everybody to come and see. We allow them to check the tender price. Then after the evaluation starts, an external consultant who is not an employee of Roads Authority first does the evaluation.

“Our evaluation is focused on three things. We check the completeness of the documents and the compliance to our tender rules. If the documents that we require are not complete, this disqualifies those who do not meet the requirements because our tender rules are very clear.

“Only those that meet all the requirements and who have all the documents go to the second phase, which is the technical evaluation.

“Here we look at the capacity of the company and experience of the management of that company. When we look at the experience, we don’t only look at the experience of the company, but also that of the senior staff who will be involved in the project.


“Then we look at the equipment capacity. Does the company have the capacity to execute the work? Do they have the equipment? Then we look at the financial capability. Does that company have the financial resources?

“After that we look at the Namibian content. For example, if it is a foreign company, have they included Namibians amongst their key staff? So we look at all these issues and we will then rank the companies based on how they would have performed. After that, we then move to the financial proposal.

“Here we look at who is the cheapest, who is expensive? But, most importantly, we must take into consideration the technical evaluation and the financial evaluation. Which means you must have a good technical score and a good financial score for you to be able to get number 1, number 2, number 3 and number 4, like that,” Lutombi explained.

He however said they were not obliged to take the cheapest tenderer.

“We have our own engineer’s estimates of projects. You will find that the market will put a bracket that the project is supposed to cost so much. Therefore, the engineer’s estimates and the market estimates should be almost the same.

“Those who get within 15 percent of our estimates, we can consider them, whether it is 15 percent down or 15 percent up.  If you are above 15 percent, we consider that your prices are very expensive. If you are below 15 percent, then we consider that your prices are ridiculously low so you won’t be able to execute the work.”

 

Weaknesses

 

The Roads Authority CEO admitted that there were some weaknesses in their tendering system that they were now trying to rectify.

He said, like any other system, their tendering process was not 100 percent perfect, but they were trying to rectify the weaknesses on a daily basis.

“What we would like to see is a situation where if international companies are participating and they get a tender, they should be able to develop capacity.

“The question is how do they develop capacity? Our current system does not really force the international people to “marry” Namibians and that is what we would like to do.

“We are carefully looking at that because joint ventures don’t necessarily mean that capacity would be built because I can decide today to join with the Chinese, South Africans or Brazilians. We can have 51 percent shareholding, but the people who manage the project are foreigners, so no capacity development will take place; it’s simply business.

“We want to make sure that when these people get contracts here they should either engage with well-established Namibian road construction companies so that these local companies can actively participate in the project.

“When the project has been completed this Namibian company should be able to tender on its own for a bigger project. This is what we want.

“Unfortunately, that is one of the issues which we are busy addressing. We are busy now revising our procurement policy and our tender rules to make sure that we tighten those kinds of gaps so that Namibians should benefit from whatever road projects, not only as labourers, but also in terms of capacity building of the construction companies,” he said.

 

Procurement Bill

 

Lutombi added that the Procurement Bill that is set to be reintroduced in parliament at the beginning of next year would also help the company tighten its procurement policies and tender rules especially in terms of equipping Namibians.

“The Bill calls for 51 percent shareholding for Namibians and 49 percent for foreigners. That is good, but we want to go the extra mile and ask some important questions.

“Are we talking about 51 percent ownership by Namibians, are we talking about 51 percent Namibian business people or are we talking about 51 percent ownership by well-established Namibian construction companies which are going to participate fully in the project?

“That is where we would want to move an extra mile, because if you leave it there at ownership only, then you are not creating capacity; it is just on paper, but the people who will be doing the work are those with 49 percent shareholding.

“They will pool their resources and they bring in the money, and we Namibians we would just be names, and that’s not the ideal.

“We want to say, yes Namibians must own this, but where does the money go to at the end of the day? To whom does the money go? Therefore, we want our people to participate fully with these well-established companies.

“Then we would be happy that the money does not only go to the person who has 49 percent ownership because he has put a lot of resources in that project, but our people also put in resources and they would be able to get training and capacity building while also making profit out of the whole deal,” Lutombi said.

This email address is being protected from spambots. You need JavaScript enabled to view it.

 

WINDHOEK OBSERVER

The Windhoek Observer is an English-language weekly newspaper, published in Namibia by Paragon Investment Holding. It is the country's oldest and largest circulating weekly.

Contact Us

Windhoek Observer House
c/o John Meinert & Rossini Street
Windhoek West
Namibia
Tel: +264 61 411 800
Fax: +264 61 226 098
www.observer.com.na