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Four projects in 2 years, zero delivery

Alindo Engineering and General Maintenance (Pty) Ltd is a very lucky company indeed. The company keeps on getting jobs with the Department of Technical Services (DTS) but the company rarely ever complete jobs. In the last three years they have been given jobs to the tune of P78 million and only one of the four projects the company was awarded is near completion.


Alindo Engineering is owned by aspiring Botswana Democratic Party (BDP) treasurer. The project completion for the projects stands at 25% (two years overdue for completion) – 90% (two years overdue for completion) – 3.5% (behind schedule by seven months) – and 100 % (final report yet to be handed over).


Pressure from the Public Accounts Committee (PAC) has forced the DTS to instruct government lawyers to demand over P6 million owed to Government from the first project. Two other projects have also been red flagged for termination because of poor implementation albeit he has been paid million as part payment for the undelivered projects. According to records, Alindo Engineering keeps on getting jobs despite its record of failing to deliver projects.


The 25% progress after three years


He was given a job for the construction of 4No. Double Storey 4 units staff houses for Maiteko Junior secondary School at the tune of P18 894 333. 47 on 31 March 2014 and he was expected to complete the projected on 05-01-2015 and later date was revised to 19-01-2015. The project as things stand is still at 25 percent completion despite the fact that he has already been paid P8 933, 077.59.


Explaining the back and forth, DTS writes: “The contractor abandoned the project since September 2015 to date. He owes the Government P6, 188, 884.01 which accrued from rejected works and unpaid mobilization. On 2nd May 2017 DTS wrote to the contractor to state how he is going to pay the Government the money he is due to pay. He wrote back on 26th May 2017 stating that the money will be paid by a proposed assignee.


The mobilization was waived to stabilise the contractor’s cash flow problems with a hope the contractor will complete the project. This decision was guided by FIDIC, (The International Federation of Consulting Engineers) clause 3.5 which state that “the conditions provide that the Engineer shall proceed to agree or determine any matter, the Engineer shall consult with each party in an endeavor to reach agreement. If agreement is not achieved, the Engineer shall make a fair determination in accordance with the contract, taking due regard of all relevant circumstances.” Attorney General’s Chambers will be contacted to assist in recovering the money owed.


The only completed project


Alindo Engineering and General Maintenance Pty Ltd also worked on the construction of staff houses at Marakanelo JSS at Ncojane. The contract sum is P10, 714, 659.20 and the contractor was paid P5, 077, 897.25. The project was awarded on 10th April 2014 and was expected to be completed on 05 December 2014 but the completion date was later revised to 25 March 2015. While the status of the project is that it has been completed, the briefing notes indicate that the final account for the project will be concluded and finalized in the second quarter of 2017/2018.


Stuck at 90% progress for four years!


On  the 11th November 2013, he was given a project to refurbish the Curriculum Development Building, in Gaborone at the tune of  P5, 932, 710.93 and he was paid P5, 422, 627.67. He was to complete the project on 28 April 2014 and the project completion date was revised to 30 August 2016. Today the project progress stands at 90 percent completion.


This is howDTS explains this situation: “The contractor is struggling to complete the contract. He was a written a letter of Notice to terminate on 4th July 2015 which he replied on 9th July 2015 by opting for mutual termination. He was invited for a meeting on 31 August 2015 to discuss mutual termination but never attended or replied the invitation letter.


On 6th April 2017 he was written a letter of Notice to Terminate and replied on 26th April 2017, he further wrote on 23 May 2017 requesting for inspection and subsequent handover of the project. On the 13th June 2017 DTS team visited the project for final inspection, but on arrival on site they noticed that contractor did not finish the works. He further pleaded that he will complete by end of June 2017. After June 2017 if the work is not complete, contract will be terminated.”


Shocking 3.5% progress in six months


On 1st December 2016 the same contractor was awarded a job to construct 9No 2beds Double Storey and 2No LA3 staff houses for Moeding College at Otse at the value of P43, 000, 062. 71 and was paid P6, 945, 543.55. The expected completion date for the project is 31st December 2017 and at the moment the project is at 3.5 percent completion.


And the DTS explanation: “DTS wrote a letter on 15th May 2017 requesting to meet the Contractor and Client (Moeding Colege) on the 22nd May 2017 top discuss poor progress of the project. After holding the meeting on 22nd May 2017 Moeding Colege wrote to the contractor requesting for recovery plan or catch up plan from the contractor. On the 9th June 2017 the contractor wrote proposing to subcontract works. On the 13th June 2017 DTS responded seeking clarity pertaining to the contractor’s proposal.

On the 14th June 2017 DTS team visited the site and observed that the progress on site is still at 3.5 percent. DTS has visited the site again and still found that the progress is still at 3.5 percent. This poor performance of the contractor has been referred to the UCCSA Board of Governors so that appropriate action on contractual obligations and possible act on non-performance by the contractor.”

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Mowana Mine to open, pay employees millions

18th January 2022
Mowana Mine

Mowana Copper Mine in Dukwi will finally pay its former employees a total amount of P23, 789, 984.00 end of this month. For over three years Mowana Copper Mine has been under judicial management. Updating members, Botswana Mine Workers Union (BMWU) Executive Secretary Kitso Phiri this week said the High Court issued an order for the implementation of the compromise scheme of December 9, 2021 and this was to be done within 30 days after court order.

“Therefore payment of benefits under the scheme including those owed to Messina Copper Botswana employees should be effected sometime in January latest end of January 2022,” Kitso said. Kitso also explained that cash settlement will be 30 percent of the total Messina Copper Botswana estate and negotiated estate is $3,233,000 (about P35, 563,000).

Messina Copper was placed under liquidation and was thereafter acquired by Leboam Holdings to operate Mowana Mine. Leboam Holdings struck a deal with the Messina Copper’s liquidator who became a shareholder of Leboam Holdings. Leboam Holdings could not service its debts and its creditors placed it under provisional judicial management on December 18, 2018 and in judicial management on February 28, 2019.

A new company Max Power expressed interest to acquire the mining operations. It offered to take over the Mowana Mine from Leboam Holdings, however, the company had to pay the debts of Leboam including monies owed to Messina Copper, being employees benefits and other debts owed to other creditors.

The monies, were agreed to be paid through a scheme of compromise proposed by Max Power, being a negotiated payment schedule, which was subject to the financial ability of the new owners. “On December 9, 2021, Messina Copper liquidator, called a meeting of creditors, which the BMWU on behalf of its members (former Messina Copper employees) attended, to seek mandate from creditors to proceed with a proposed settlement for Messina Copper on the scheme of compromise. It is important to note that employee benefits are regarded as preferential credit, meaning once a scheme is approved they are paid first.”

Negotiated estate is P35, 563,000

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Councilors’ benefits debacle-savingram reveals detail

18th January 2022

A savingram the Ministry of Local Government and Rural Development sent to Town Clerks and Council Secretaries explaining why councilors across the country should not have access to their terminal benefits before end of their term has been revealed.

The contents of the savingram came out in the wake of a war of words between counselors and the Ministry of Local Government and Rural Development. The councilors through the Botswana Association of Local Authorities (BALA) accuse the Ministry of refusing to allow them to have access to their terminal benefits before end of their term.

This has since been denied by the Ministry.  In the savingram to town councils and council secretaries across the country, Permanent Secretary in the Ministry of Local Government and Rural Development Molefi Keaja states that, “Kindly be advised that the terminal benefits budget is made during the final year of term of office for Honorable Councilors.”  Keaja reminded town clerks and council secretaries that, “The nominal budget Councils make each and every financial year is to cater for events where a Councilor’s term of office ends before the statutory time due to death, resignation or any other reason.”

The savingram also goes into detail about why the government had in the past allowed councilors to have access to their terminal benefits before the end of their term.  “Regarding the special dispensation made in the 2014-2019, it should be noted that the advance was granted because at that time there was an approved budget for terminal benefits during the financial year,” explained Keaja.  He added that, “Town Clerks/Council Secretaries made discretions depending on the liquidity position of Councils which attracted a lot of audit queries.”

Keaja also revealed that councils across the country were struggling financially and therefore if they were to grant councilors access to their terminal benefits, this could leave their in a dire financial situation.  Given the fact that Local Authorities currently have cash flow problems and budgetary constraints, it is not advisable to grant terminal benefits advance as it would only serve to compound the liquidity problems of councils.

It is understood that the Ministry was inundated with calls from some Councils as they sought clarification regarding access to their terminal benefits. The Ministry fears that should councils pay out the terminal benefits this would affect their coffers as the government spends a lot on councilors salaries.

Reports show that apart from elected councilors, the government spends at least P6, 577, 746, 00 on nominated councilors across the country as their monthly salaries. Former Assistant Minister of Local Government and Rural Development, Botlogile Tshireletso once told Parliament that in total there are 113 nominated councilors and their salaries per a year add up to P78, 933,16.00. She added that their projected gratuity is P9, 866,646.00.

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Households spending to drive economic recovery

17th January 2022

A surge in consumer spending is expected to be a key driver of Botswana’s economic recovery, according to recent projections by Fitch Solutions. Fitch Solutions said it forecasts household spending in Botswana to grow by a real rate of 5.9% in 2022.

The bullish Fitch Solutions noted that “This is a considerable deceleration from 9.4% growth estimated in 2021, it comes mainly from the base effects of the contraction of 2.5% recorded in 2020,” adding that, “We project total household spending (in real terms) to reach BWP59.9bn (USD8.8bn) in 2022, increasing from BWP56.5bn (USD8.3bn) in 2021.”  According to Fitch Solutions, this is higher than the pre-Covid-19 total household spending (in real terms) of P53.0 billion (USD7.8bn) in 2019 and it indicates a full recovery in consumer spending.

“We forecast real household spending to grow by 5.9% in 2022, decelerating from the estimated growth of 9.4% in 2021. We note that the Covid-19 pandemic and the related restrictions on economic activity resulted in real household spending contracting by 2.5% in 2020, creating a lower base for spending to grow from in 2021 and 2022,” Fitch Solutions says.

Total household spending (in real terms), the agency says, will increase in 2022 when compared to 2021. In 2021 and 2022, total household spending (in real terms) will be above the pre-Covid-19 levels in 2019, indicating a full recovery in consumer spending, says Fitch Solutions.  It says as of December 6 2021 (latest data available), 38.4% of people in Botswana have received at least one vaccine dose, while this is relatively low it is higher than Africa average of 11.3%.

“The emergence of new Covid-19 variants such as Omicron, which was first detected in the country in November 2021, poses a downside risk to our outlook for consumer spending, particularly as a large proportion of the country’s population is unvaccinated and this could result in stricter measures being implemented once again,” says Fitch Solutions.

Growth will ease in 2022, Fitch Solution says. “Our forecast for an improvement in consumer spending in Botswana in 2022 is in line with our Country Risk team’s forecast that the economy will grow by a real rate of 5.3% over 2022, from an estimated 12.5% growth in 2021 as the low base effects from 2020 dissipate,” it says.

Fitch Solutions notes that “Our Country Risk team expects private consumption to be the main driver of Botswana’s economic growth in 2022, as disposable incomes and the labour market continue to recover from the impacts of the Covid-19 pandemic.”
It says Botswana’s tourism sector has been negatively impacted by the Covid-19 pandemic and the related travel restrictions.

According to Fitch Solutions, “The emergence of the Omicron variant, which was first detected in November 2021, has resulted in travel bans being implemented on Southern African countries such as South Africa, Botswana, Lesotho, Namibia, Zimbabwe and Eswatini. This will further delay the recovery of Botswana’s tourism sector in 2021 and early 2022.”  Fitch Solutions, therefore, forecasts Botswana’s tourist arrivals to grow by 81.2% in 2022, from an estimated contraction of 40.3% in 2021.

It notes that the 72.4% contraction in 2020 has created a low base for tourist arrivals to grow from.  “The rollout of vaccines in South Africa and its key source markets will aid the recovery of the tourism sector over the coming months and this bodes well for the employment and incomes of people employed in the hospitality industry, particularly restaurants and hotels as well as recreation and culture businesses,” the report says.

Fitch Solutions further notes that with economies reopening, consumers are demanding products that they had little access to over the previous year. However, manufacturers are facing several problems.  It says supply chain issues and bottlenecks are resulting in consumer goods shortages, feeding through into supply-side inflation.  Fitch Solutions believes the global semiconductor shortage will continue into 2022, putting the pressure on the supply of several consumer goods.

It says the spread of the Delta variant is upending factory production in Asia, disrupting shipping and posing more shocks to the world economy. Similarly, manufacturers are facing shortages of key components and higher raw materials costs, the report says adding that while this is somewhat restricted to consumer goods, there is a high risk that this feeds through into more consumer services over the 2022 year.

“Our global view for a notable recovery in consumer spending relies on the ability of authorities to vaccinate a large enough proportion of their populations and thereby experience a notable drop in Covid-19 infections and a decline in hospitalisation rates,” says Fitch Solutions.
Both these factors, it says, will lead to governments gradually lifting restrictions, which will boost consumer confidence and retail sales.

“As of December 6 2021, 38.4% of people in Botswana have received at least one vaccine dose. While this is low, it is higher than the Africa average of 11.3%. The vaccines being administered in Botswana include Pfizer-BioNTech, Sinovac and Johnson & Johnson. We believe that a successful vaccine rollout will aid the country’s consumer spending recovery,” says Fitch Solutions.  Therefore, the agency says, “Our forecasts account for risks that are highly likely to play out in 2022, including the easing of government support. However, if other risks start to play out, this may lead to forecast revisions.”

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