Coastal Bahnhof Development in Limbo

CONSTRUCTION work on the Bahnhof Square Shopping Centre in Swakopmund has been delayed until the Minister of Works and Transport, Erkki Nghimtina, and TransNamib have resolved legal questions around a lease agreement.

The lease agreement is between TransNamib and Bahnhof Square’s developer, Stack Properties 37.

“Given the current uncertainties, there will be delays in the commencement of the centre until TransNamib resolves the issues with its shareholding ministry. This means we will not be in a position to complete the new railway station as it wouldn’t be prudent to continue spending funds until the issues between TransNamib and the ministry are resolved,” Paulo Shipoke of Stack told The Namibian.

The project will cost almost N$400 million for the first phase and an additional N$700 million for its subsequent two phases.

Earlier this year, Nghimtina asked government to terminate the agreement between TransNamib and Stack because the ministry claimed not to know about it.

The Namibian also reported that Nghimtina asked for Cabinet to compel the parastatal to acquire its own properties without outside partners.

According to Nghimtina, the public private partnership (PPP) and a joint venture agreement TransNamib entered into with Stack Properties 37, as well as the Bahnhof development agreement was invalid, and that TransNamib was given minority shareholding, while leasing out its properties for a long period, without the property market value being determined.

In another English weekly, it was reported that Nghimtina gave TransNamib an ultimatum to follow the law that governs parastatal shareholding in private companies or terminate existing development agreements countrywide.

Meanwhile, members of the Swakopmund community are saying that the relocation of the railway line was Stack’s attempt to create the impression that there is still a development underway, regardless of the impression that the government has attempted to nullify the development contract.

Shipoke, however, maintained that Stacks Properties 37 entered into a legally binding PPP and a long-term lease agreement with TransNamib over the properties in Swakopmund.

“We believe these agreements were entered into by two legal entities. The TransNamib board approved and signed these agreements, which were properly constituted in terms of the law. So unless it can be proven in court that TransNamib as a legal entity was not in a position to enter into such agreements or its board was not legally constituted, then the Bahnhof agreement legally exists and is still legally binding to both parties,” he told The Namibian.

Shipoke said it was not up to Stack to determine the internal procedures and corporate governance that TransNamib needs to follow in conducting its business.

“We were satisfied that we were negotiating with a legal entity and properly constituted board. How they obtain approvals or consent from the ministry or any other authority is for them to decide. We did request and were provided with the Power of Attorney granted by the TransNamib Board to its chairman to sign the various agreements,” he added.

Legal agreements such as the one concluded between Stacks and TransNamib would normally be resolved through the judicial system if there are disagreements or intentions to cancel such agreements.

“We hope this will not come to that and that the minister and TransNamib will be in a position to settle their differences in order to allow this economically significant project to proceed unhindered. We have secured large investors from outside Namibia to invest in this project and have so far spent over N$60 million on the project in terms of having legally entered into agreements. Attempts to cancel such agreements at this stage will really raise serious doubt among the investment community about Namibia being an investor-friendly destination, and whether it is safe to do business with the Namibian government and its agencies, including parastatals,” said Shipoke.

Shipoke said that an ACC investigation into the transaction revealed no sign of corruption and so the “files were closed”.

Calls to Nghimtina for comment went unanswered, although messages were left. TransNamib’s CEO Sara Naanda was also not available for comment because she was in a meeting. A message was left for her to call back on the matter.

Construction workers at the site as well as TransNamib officials informed The Namibian that they were just waiting for the green light from TransNamib and the minister to continue the work, while passengers at Swakopmund will have to suffer much inconvenience when they – mostly the elderly and children – have to walk 600 metres from the old ticket office to the new unfinished passenger platform, which exposes them to the harsh weather conditions at the coast, while waiting for their train.

Source : The Namibian