Category Archives: Business and Economics

Zambia – president Lungu considering moving capital from Lusaka

Sowetan -live

Zambia is considering a proposal to move its capital from fast-developing Lusaka to a nearly uninhabited marshland district in the centre of the country, a minister said yesterday.

Lusaka has been the national capital since 1935 when Zambia was known as Northern Rhodesia under British colonial rule. “Within the next 10 years, you will not be able to conduct business in Lusaka because of congestion,” National Planning and Development Minister Lucky Mulusa said.

“The city is overcrowded, and so the sensible thing to do is move the capital out.”

Mulusa said President Edgar Lungu’s cabinet was due to discuss the move to Ngabwe district within the next two weeks.

Ngabwe is a rural district in Zambia’s Central Province, close to Kabwe town, and about 120km north of Lusaka. It is often cut off when roads flood during rains, but Mulusa said the district was well-positioned in the middle of the country.

He said Ngabwe would be planned to ensure it could host regional bodies such as the AU, based in Addis Ababa, Ethiopia, and the Southern African Development Community, based in Gaborone, Botswana. “If Lusaka was properly situated, it would have benefited many institutions.”

Nigeria moved its capital from Lagos to Abuja in 1991, while Myanmar’s military rulers moved its capital 200 miles north from Yangon to a new site at Naypyidaw in 2005.

Tanzania’s capital Dodoma was designed in the 1980s but many government activities remain in Dar es Salaam.

South Africa – Molefe farce like the Life of Brian

Mail and GuardianMonty Python’s Life of Molefe

Not Atul: Brian Molefe was meant to be the tame finance minister in the Republic of Gupta, but one ANC faction said no. (Rodger Bosch/AFP)
Not Atul: Brian Molefe was meant to be the tame finance minister in the Republic of Gupta, but one ANC faction said no. (Rodger Bosch/AFP)

Earlier this week someone advised me to consider a career in comedy if I should ever tire of my various jobs. Sadly, I’m no comedic talent. They were confusing the comedic state of our politics with any talent of mine to generate laughter when talking about politics.

Life in the Republic of Gupta is so tragicomic that one merely needs to give a straightforward narration of what is going on, while playing some circus music or the theme song for Pinocchio in the background, and thereby also perform one’s own lie of being a comedian.

Not a week goes by these days without spectacular new lies surfacing, new evidence of state capture dripping into the public space, and the foundations of our democracy being shaken yet again.

The latest web of lies in which the Monty Pythonesque life of Brian Molefe is entangled is this week’s political lowlight.

The Eskom boss and the Eskom board’s chair, Baldwin “Ben” Ngubane, take us for fools.

The latest tomfoolery is more dangerous than usual because it involves a range of improbable statements made under oath and which are now before the courts.

These two guys would have us believe that Molefe never resigned from Eishkom. He simply went on early retirement.

It gets worse. Turns out that young Molefe isn’t old enough to qualify for early retirement, and so they snowball the lies by agreeing instead to pretend that Molefe has been on unpaid leave since the beginning of this year. I don’t believe a word of this rubbish. It is all the more shocking that these claims are made in documents before a court of law.

Not only do these people take the public for fools, they also make a mockery of judicial processes that are supposed to be respected when we are hauled before a court.

Molefe resigned. He unilaterally told us he was doing so for the sake of good corporate governance and to clear his sullied name, following the bad press for Eskom and for himself, after he was implicated in the previous public protector Thuli Madonsela’s State of Capture report.

That is why Cabinet, through the shareholder representative, Minister of Public Enterprises Lynne Brown, explicitly accepted his resignation and wished him all the best as he contemplated his next career move.

Molefe never went on early retirement and he never took unpaid leave. Who the heck takes unpaid leave and then gets sworn in as an MP of our National Assembly, a job you cannot hold if you’re in the employ of a state entity such as Eskom?

So what is going on here? It’s simple. Molefe was meant to be the next minister of finance. That is what President Atul Gupta wanted.

President Gupta is in a battle to loot from the state while a faction of the ANC tries to prevent the complete theft of state resources. Jacob Zuma is simply a Gupta henchman.

The Guptas often get what they want. They do not, however, always get what they want. Every now and then the anti-Gupta faction in the ANC scores a win.

The captured boy-child, Brian Molefe, was taken to work in Parliament with a view to joining the executive of henchman Zuma. The anti-Gupta faction inside the ANC pushed back.

In the end, Malusi Gigaba, cut from the same cloth as Molefe but not yet tainted as badly, had to be appointed minister of finance instead.

But the investment of President Gupta in young Molefe is worthless if Molefe is simply an ANC MP. Parliament does not have enough loot for the rapacious Gupta family’s liking. So Molefe had to be hastily returned to the trough of a strategic state-owned company where the Guptas need him to dish them up some more loot.

That is how we got to the current mess of lie after lie being told to justify why Molefe is back at Eishkom. It is not a matter of good faith and mistaken early retirement. It is simply Saxonwold Shebeen shenanigans.

It doesn’t help that Minister BrownNose behaves as if she is powerless. Either Eishkom lied to her about Molefe’s resignation or she, too, is captured.

If she is captured, the truth will eventually out and she will have ruined a decent career in politics. Alternatively, she was genuinely kept in the dark by Ngubane and Molefe, in which case she should resign – because her oversight role was poorly performed – or immediately use her powers more effectively to get rid of Molefe and the board.

With every day that passes and the status quo remains, the minister’s position becomes more and more untenable. What’s the point of being our shareholder representative if you cannot represent the public interest effectively?

Meanwhile, Zuma is quiet because he is not interested in governing beyond taking instructions from the parallel executive structure based at the Saxonwold Shebeen.

We are now at the mercy of an ANC at war with itself. You’d be forgiven for believing that the anti-Gupta faction is trustworthy and honest.

After all, we can do with some good news, can’t we? Don’t be naive though. Even those fighting the Guptas and Zuma are merely positioning themselves for proximity to the leftovers at the trough.

Why else were they mostly quiet until they got booted from the state or the executive, or had a falling-out with the chief Gupta henchman from Nkandla?

There are many dark days ahead – even if Eskom keeps the lights on.

Eusebius McKaiser

Eusebius McKaiser

South Africa – Zwane wants 30% black ownership in mining

News24

May 26 2017 07:16

Sam Mkokeli, Bloomberg
Mineral Resources Minister Mosebenzi Zwane. (Pic:

Mineral Resources Minister Mosebenzi Zwane. (Pic: Gallo Images)

Johannesburg – Mines minister Mosebenzi Zwane has proposed raising the mandatory black ownership of mining assets to 30% from 26%, drawing opposition from some ruling party officials who fear it will deter investment, two people familiar with the situation said.

The proposal is part of a long-delayed draft mining charter outlined by Zwane, an ally of President Jacob Zuma, to the African National Congress’ economic policy committee on May 13. Senior party policy officials warned of the potential negative consequences of his plans, said the people, who asked not to be identified because Zwane hasn’t formally proposed the changes for public comment before they become binding.

Zuma’s cabinet on Wednesday approved the draft mining charter, which will be released for public comment once it has been gazetted. ANC spokesperson Zizi Kodwa didn’t answer calls seeking comment. It’s unclear whether cabinet demanded changes.

South Africa’s Chamber of Mines said this week that the government needs to finalise its mining regulations if falling investment in the industry is to be reversed. Zuma, who’s due to step down as leader of the ANC in December and as the nation’s president in 2019, has called for “radical economic transformation” to more fairly distribute the benefits of South Africa’s economy among the black majority.

“The chamber has not had any sight of the proposed revised charter” and is unable to comment at this stage, Charmane Russell, a spokesperson for the industry group, said in a text message.

The 30% black ownership can be made up of shares held by black investors, employees and community groups, the people said. Zwane didn’t answer calls made to his mobile phone.

Metals and minerals account for about half of South Africa’s exports, with the country holding the biggest reserves of platinum, chrome and manganese. In 2010, Citigroup valued the mineral wealth at $2.5trn, the most of any nation. Mining companies including Anglo American, Glencore and AngloGold Ashanti operate in the country.

Africa is not poor, we are stealing its wealth

Al Jazeera

 Our climate crisis was not caused by Africa, but Africans will feel the effect more than most others, writes Dearden [Siphiwe Sibeko/Reuters]
Our climate crisis was not caused by Africa, but Africans will feel the effect more than most others, writes Dearden [Siphiwe Sibeko/Reuters]

By

Nick Dearden is the director of UK campaigning organisation Global Justice Now.

Africa is poor, but we can try to help its people.

It’s a simple statement, repeated through a thousand images, newspaper stories and charity appeals each year, so that it takes on the weight of truth. When we read it, we reinforce assumptions and stories about Africa that we’ve heard throughout our lives. We reconfirm our image of Africa.

Try something different. Africa is rich, but we steal its wealth.

That’s the essence of a report (pdf) from several campaign groups released today. Based on a set of new figures, it finds that sub-Saharan Africa is a net creditor to the rest of the world to the tune of more than $41bn. Sure, there’s money going in: around $161bn a year in the form of loans, remittances (those working outside Africa and sending money back home), and aid.

But there’s also $203bn leaving the continent. Some of this is direct, such as $68bn in mainly dodged taxes. Essentially multinational corporations “steal” much of this – legally – by pretending they are really generating their wealth in tax havens. These so-called “illicit financial flows” amount to around 6.1 per cent of the continent’s entire gross domestic product (GDP) – or three times what Africa receives in aid.

Then there’s the $30bn that these corporations “repatriate” – profits they make in Africa but send back to their home country, or elsewhere, to enjoy their wealth. The City of London is awash with profits extracted from the land and labour of Africa.

There are also more indirect means by which we pull wealth out of Africa. Today’s report estimates that $29bn a year is being stolen from Africa in illegal logging, fishing and trade in wildlife. $36bn is owed to Africa as a result of the damage that climate change will cause to their societies and economies as they are unable to use fossil fuels to develop in the way that Europe did. Our climate crisis was not caused by Africa, but Africans will feel the effect more than most others. Needless to say, the funds are not currently forthcoming.

If African countries are to benefit from foreign investment, they must be allowed to – even helped to – legally regulate that investment and the corporations that often bring it.

In fact, even this assessment is enormously generous, because it assumes that all of the wealth flowing into Africa is benefitting the people of that continent. But loans to governments and the private sector (at more than $50bn) can turn into unpayable and odious debt.

Ghana is losing 30 per cent of its government revenue to debt repayments, paying loans which were often made speculatively, based on high commodity prices, and carrying whopping rates of interest. One particularly odious aluminium smelter in Mozambique, built with loans and aid money, is currently costing the country £21 for every £1 that the Mozambique government received. British aid, which is used to set up private schools and health centres, can undermine the creation of decent public services, which is why such private schools are being closed down in Uganda and Kenya. Of course, some Africans have benefitted from this economy. There are now around 165,000 very rich Africans, with combined holdings of $860bn. But, given the way the economy works, where do these people mainly keep their wealth? In tax havens. A 2014 estimate suggests that rich Africans were holding a massive $500bn in tax havens. Africa’s people are effectively robbed of wealth by an economy that enables a tiny minority of Africans to get rich by allowing wealth to flow out of Africa.

So what is the answer? Western governments would like to be seen as generous beneficiaries, doing what they can to “help those unable to help themselves”. But the first task is to stop perpetuating the harm they are doing. Governments need to stop forcing African governments to open up their economy to privatisation, and their markets to unfair competition.

OPINION: Investment in Africa – There’s room for everyone

If African countries are to benefit from foreign investment, they must be allowed to – even helped to – legally regulate that investment and the corporations that often bring it. And they might want to think about not putting their faith in the extractives sector. With few exceptions, countries with abundant mineral wealth experience poorer democracy, weaker economic growth, and worse development. To prevent tax dodging, governments must stop prevaricating on action to address tax havens. No country should tolerate companies with subsidiaries based in tax havens operating in their country.

Aid is tiny, and the very least it can do, if spent well, is to return some of Africa’s looted wealth. We should see it both as a form of reparations and redistribution, just as the tax system allows us to redistribute wealth from the richest to the poorest within individual societies. The same should be expected from the global “society”.

To even begin to embark on such an ambitious programme, we must change the way we talk and think about Africa. It’s not about making people feel guilty, but correctly diagnosing a problem in order to provide a solution. We are not, currently, “helping” Africa. Africa is rich. Let’s stop making it poorer.

Nick Dearden is the director of UK campaigning organisation Global Justice Now. He was previously the director of Jubilee Debt Campaign.

The views expressed in this article are the author’s own and do not necessarily reflect Al Jazeera’s editorial policy. 

South Africans poorer than they were in 2015

News24

Lameez Omarjee
Johannesburg – The average adult South African is poorer in 2016 than in 2015, according to research by Standard Bank.

Standard Bank released its 2016 income estimates on Wednesday. The research measures income changes across different income groups since 2011. The bulk (70%) of income comes from salaries and wages. The study is based on the adult population aged 15 and above. South Africa has an estimated adult population of 39.7 million.

It shows that income per person essentially declined 1.3% in 2016. This is down from an average of R76 578 to R75 541. Total personal income is estimated to be over R3trn, up from R2.8trn in 2015; this is a nominal growth of 6.5%. Taking into account inflation of 6.3% in 2016, real growth was only at 0.2%.

Since 2011, income per person has only grown at an average of 0.4%.

“These declining income levels are against the backdrop of the challenging economic environment and are apparent across all income groups earning above R12 700 per annum,” the report said.

Those in the lowest income group, earning between R0 and R12 700, received a 2.2% increase in income. Since 2011, income has increased by 22.7%. However, those in the highest income group (earning more than R1.69m) have become poorer, with income per person declining by 8.8% between 2015 and 2016. The income has declined 30.6% since 2011.

The size of this group has declined 1.7% since 2011. Per capita income has risen 19%, from as low as R807 to R989 per annum. This group accounts for almost half the adult population.

Income groups

The size of higher income groups have grown only marginally. The affluent group, which earn between R787 001 to R1.69m, has grown by 0.54%. Average income per person in 2016 was R960 000, lower than R1.2m reported in 2011.

The size of the wealthy income group, those earning above R1.69m, has increased by 0.05%. The average income per person is estimated at R4.53m, down from R6.53m reported in 2011.

Within these groups, real income per person declined between 15% and 30% since 2011. This is because the pace of income growth has not kept up with the move of the population from lower income groups to affluent groups.

There has been little growth (0.1%) within the middle income segment (those earning between R51 001 to R382 000 per year). Income per person declined by an average of 4.5% between 2011 and 2016. This is because income growth has not kept up with inflation, the report said.

Africa’s growth will be boosted by recovery in commodity prices

Reuters

Photo

NEW DELHI Africa will see a lift-off in economic growth this year and next on the back of a rebound in global commodity prices, an annual report predicted on Monday.

The African Economic Outlook, co-authored by the African Development Bank, the OECD and the United Nations Development Programme, expects the continent’s economy to grow by 3.4 percent in 2017 and 4.3 percent in 2018, up from an estimated 2.2 percent last year.

The report was released as the African Development Bank began its annual meeting, this year being hosted by India in the capital of Prime Minister Narendra Modi’s home state of Gujarat.

Modi invited African leaders to a summit in 2015 and has sought to promote ‘south-south’ economic ties with a continent that has a large Indian diaspora but has seen far larger inward investment from China.

The report said that a decline in commodity prices starting in mid-2014 had a devastating impact on several commodity-exporting African economies. Nigeria, for example, which has the biggest share in Africa’s GDP, slipped into recession.

Africa has been worryingly dependent on commodities to power economic growth. The fall in raw materials prices inflicted a significant shock on sub-Saharan Africa as fuels, ore and metals account for more than 60 percent of the region’s exports.

However, commodities have staged a comeback since late last year, buoyed by an improvement in the world economic outlook together with the return of risk appetite among global investors.

If the rise in commodity prices is sustained, the report said, it would trim the continent’s current account deficit to 5 percent of GDP this year from 6.5 percent in 2016.

Africa is expected to witness a marginal improvement in external inflows that are estimated to inch up to $179.7 billion in 2017 from $177.7 billion a year ago.

The report urged the countries in the region to diversify their exports to reduce their exposure to commodity-price shocks and take measures to boost trade within Africa.

(Reporting by Rajesh Kumar Singh; Editing by Douglas Busvine)

South Africa’s Watergate – Zuma friend nets huge cash advance

City Press/News24

2017-05-21 05:51

KwaZulu-Natal tycoon Philani Mavundla stands outside his homestead in Greytown. (Gallo Images)

KwaZulu-Natal tycoon Philani Mavundla stands outside his homestead in Greytown. (Gallo Images)

A close friend of President Jacob Zuma was paid an R81m advance on a R1bn tender by an entity of the department of water and sanitation.

Philani Mavundla (49), a construction magnate who once offered to pay Zuma’s portion of the security upgrades to his home in Nkandla, is involved in a joint venture which was awarded the R1bn contract to build an acid mine drainage plant in Springs, east of Johannesburg.

However, documents City Press has obtained show his joint venture company was paid the R81m advance before he even broke ground on the plant – which is expressly forbidden by the Public Finance Management Act (PFMA).

Yet, a spokesperson for the department’s entity insists the advance payment was regular.

Mavundla, the former mayor of Greytown in KwaZulu-Natal, was awarded the contract by the Trans Caledon Tunnel Authority (TCTA), which falls under the department of water and sanitation. It is tasked with managing and delivering bulk water-supply projects around the country.

A senior TCTA official told City Press this week: “The media has neglected this organisation, but the rot that is here is enormous. The acid mine drainage projects alone are worth R12bn. Companies have received projects which did not go out via public tender. People are carrying money out of this institution in bags.”

This is the latest instalment of City Press’ Watergate investigation, which has previously exposed the scale of corruption in bulk water delivery projects, as well as how Water and Sanitation Minister Nomvula Mokonyane’s young companion has been effectively running her department, and how Phase Two of the Lesotho Highlands Water Project was stalled by Mokonyane in apparent efforts to ensure that businesspeople close to her got a slice of the R26bn deal.

Last month, City Press also reported that Treasury shot down Mokonyane’s attempt to consolidate the TCTA and the Water Trading Entity into a parastatal with its own board, budget and balance sheet.

The TCTA has also been implicated in further alleged wrongdoing after it paid another company, Intelligent Water Solutions (IWS), R12m before a contract was even signed. Invoices that City Press has obtained show that IWS started submitting invoices from June last year, but the contract with TCTA – for the “maintenance and operations of another acid mine drainage purifying plant” in Germiston, eastern Johannesburg – was only signed in August. The remainder of the R36m they initially billed for was paid by TCTA at the end of August.

The entire 36-month contract awarded to IWS is worth R234m. IWS claims the advance payments were agreed to by TCTA.

MAVUNDLA’S BIG DEAL

Meanwhile, copies of paid invoices and email exchanges between TCTA officials show that in June 2014, the TCTA advanced R81m to a joint venture involving Mavundla and Italian construction giant CMC.

The joint venture, known as CMC-PG Mavundla EB JV, built the R1bn Eastern Basin acid mine drainage purifying plant, which cleans the water filling disused mines and makes it fit for domestic use.

The invoices and emails show that:

  • Mavundla’s joint venture was paid the advance, despite officials initially informing them they would not receive an advance payment.
  • Even though it had completed and commissioned the plant in June last year, the joint venture continued to submit monthly invoices for the plant’s construction until three months ago.
  • The company was paid a further R42m for an “operations and maintenance” contract at the same plant which did not go out to tender and seems to have been extended irregularly.
  • The joint venture was paid R93m in unspecified variation orders, but requested an additional R144m for more unspecified variation orders. It is unclear if this amount has been paid.

TCTA spokesperson Wanda Mkutshulwa confirmed that for the main contract, the joint venture was paid R956m, excluding variations, value-added tax and contingencies. She insisted it was all above board.

But a senior Treasury official, who spoke on condition of anonymity, told City Press that “there was no place and space for advance payments in the PFMA”.

“The normal way is that you supply the goods and the services, then we pay – not the other way round. The bidding process is meant to eliminate those who do not have resources and those who do not have the capacity to do the job,” the official said.

“If you can give a tender to anyone and then assist them to do the job, what is the point of procurement policies? Advancing payments means you can give a tender to anyone, without regard to whether they have the resources or capacity to deliver.”

WHO IS MAVUNDLA?

Mavundla found fame in 2014 when he offered to pay back Zuma’s debt following former public protector Thuli Madonsela’s Nkandla finding that the president should personally pay a portion of the R246m security upgrades to his Nkandla home.

One of his companies, PG Mavundla Engineering, was involved in large construction projects in KwaZulu-Natal, Lesotho and Gauteng – including Durban’s Inkosi Albert Luthuli International Convention Centre, Sibaya Casino and the R250m John Ross Highway Bridge in Richards Bay. It is also involved in Eskom’s R20bn Ingula hydro-electricity scheme, near Ladysmith.

In 2011, Mavundla was elected mayor of Greytown’s Umvoti Municipality but declined to draw the R700 000-a-year salary, diverting the money to development projects instead.

He owns a palatial property outside the town, which features a triple-storey mansion with 28 bedrooms, 12 lounges and a gym for him and his immediate family.

By October 2014, he had three wives and 18 children.

He is listed as an active director of 15 companies and owns four more properties, including the Propaganda Hotel and the Mavundla Square Shopping Mall in Greytown.

In 2005, he helped establish the Friends of Jacob Zuma Trust to raise funds for his fraud and corruption trial.

In 2008, Mavundla slaughtered 20 cattle to celebrate Zuma’s ANC presidency victory at Polokwane in Limpopo.

In June last year, Durban’s Daily News reported that “financial constraints” forced PG Mavundla Engineering to cede a R20m Durban housing contract to another company.

WHAT THEY SAY

Mkutshulwa said the advance paid to Mavundla’s joint venture was provided for in the contract.

“It is not true that TCTA refused to pay; neither is it true that this was against the PFMA. The upfront payment was provided for under the International Federation of Consulting Engineers’ conditions of contract. The contract allowed for an advance payment of 10% of the contract amount, in return for an advance payment guarantee.

“An advance payment serves to fund initial site establishment costs and payment for long lead items. It is repaid by the contractor over a predetermined fixed period during the life of the contract.”

Although the contract was concluded in June 2016, Mkutshulwa said such projects had a standard three-month trial period to ensure the plant operated well.

“Further payments were for an extended period for the operations of the plant and for noncritical work done during the 12-month defects liability period, which was part of the original contract,” she said.

Mkutshulwa said Treasury approved the extension of the contract for another year for operations, which was not included in the contract which ended in August last year.

She said the company would be paid R98m for operations, adding that this figure excluded R48 million in variations. Variations for the original contract amounted to R150m.

Mkutshulwa said there was no tender for the IWS contract as no other company could do the work.

She said the company was paid before the contract was signed in August because there was an “interim contract” between April and July. The invoices paid before then were for the “interim agreement”.

About the IWS contract, she said: “Only a letter confirming the conclusion of negotiations was sent to IWS on July 28 2016, but because of internal processes, the relationship for the 36-month contract was terminated in December 2016 before a contract could be signed.

“Although we had terminated the 36-month contract, we renegotiated a six-month interim contract while we went on an open tender, which was approved by the board in December 2016.”

IWS boss Dumi Luthuli also said there was an “interim three-month agreement”, adding that the money paid before the contract was signed was for management, personnel, maintenance, repairs, quality management and chemicals.

After initially being by told CMC-PG Mavundla EB JV lawyer Nicqui Galaktiou that her client would only be able to answer the list of questions sent to them on Friday morning by Wednesday, we received a detailed response after City Press had already gone to print.

Below is the detailed response:

1. When was PG Mavundla appointed to handle this project?
PG Mavundla was NOT appointed. Following a Two Envelope Tender submitted and evaluated the  Joint Venture between CMC SA Branch  and PG Mavundla Engineering (Pty) Ltd was appointed as per the Letter of Acceptance dated 21 May 2014 received from TCTA (the Employer) on 23 May 2014.

2. How much was PG Mavundla’s contract worth?
Once again for the sake of clarity we record that the contractor duly appointed was CMC / PG Mavundla Engineering Eastern Basin Joint Venture(“CMC PGM JV”). The accepted contract amount was R956,141,123.68 (Nine Hundred and Fifty Six Million, One Hundred and Forty One Thousand, One Hundred and Twenty Three Rand and 68/100), excluding VAT, escalation and contingencies.

3. For how long was the contract supposed to be?
The duration of the contract on conclusion of same was expected to be 18 months (15 months for the  construction works followed by 3 months of plant trial operation) and thereafter a one year maintenance period which is the defect notification period.

4. PG Mavundla was paid an upfront of R81 million, despite the TCTA’s refusal to do this due to the fact that this is not in line with the PFMA. Why was PG Mavundla paid an upfront fee of R81m?
The above was forseen in the Tender Documents available to all tenderers specifying that same will be a condition of the Tender on Award. The advance payment was accordingly duly provided for in the contract entered into with  CMC PG JV.  The contractual condition for payment of the advance payment was that the contractor would provide a Guarantee in favour of the Employer before payment. The Guarantee was duly issued prior to payment being effected. An advance payment was contractually necessary so as to  to enable the contractors to place the order for the deep mining submersible pumps (long lead items). The Employer was not prejudiced in any way in light of the Guarantee requirement.

5. Who approved the advance payment?
As per above mentioned point, an advance payment was foreseen in the Tender documents and on Award became a contractually binding obligation. As per the  usual contract procedure and conditions (FIDIC 1999) the advance payment was certified by the Employer’s consultant (“the Engineer”).

6. This plant was completed and declared operational and commissioned in June last year. But the company continued submitting invoices until, at least, February this year. What was the company invoicing for?
It was agreed between the Parties by way of a duly concluded addendum that CMC-PG JV’s  operation of the plant would be extended until August 2017, in addition to certain necessary additional works related thereto to ease the plant operation and to dispose of the sludge. This is currently being implemented.

7. As far as City Press is concerned, PG Mavundla was contracted to build the Acid Mine Drainage purifying plant. But it appears that, from documents we have received that the TCTA paid  about 7 invoices “Maintenance and Operations” invoices to the company, to the tune of over R40 million. This was from September last year. Did PG Mavundla receive a “Maintenance & Operations” Tender?
Refer to response in paragraph 6 above.

8. If yes, when did the company receive the tender?
Addendum 3 was concluded on 2nd February 2017.

9. How much was the tender worth?
The final cost is not yet determined as the additional work is not yet completed.

10. Was the tender ever advertised?
Yes.

11. If yes, when was it advertised?
The Tender documents were available for collection from 23 July 2013.

12. In which media outlets was it advertised?
Our client is not in a position to indicate the list of media outlets. The Employer will be in a better position to do so. Our client can however confirm that it, as with most other companies, monitors Tenders advertised in newspapers on a daily basis including on line subscription services such as ‘On line Tender SA” and the CIDB website.

13. Please send us all minutes of all the tender processes.
Our client was not involved in the Employer’s Tender adjudication process, which is something you would know. Kindly refer this request to the Employer.

14. PG Mavundla claimed about a further R93m in variations orders. And this was paid. However, according to documents received by City Press, the company further claimed about R144m in variations orders. What was this R144m for?
The total amount of variations certified as per the conditions of the contract by the Employer’s representative , AECOM (the Engineer) as at IPC in 2017, amounts to R152 701 982.27.  In light of your unreasonable timeframes our client cannot confirm what portion of these certified amounts have in fact been received to date. The main variations relate to the realization of an Eskom sub-station to provide power to the plant and improvements to the electro-mechanical components of the plant.

15. Why did the TCTA paid this R144m as it had already paid R93m?
The cumulative amount of variations certified is reported above.