Mass Housing … Govt Asked to Pay for Losses

ONE of the biggest companies contracted to build over 2 000 units under the suspended mass housing programme at Swakopmund has demanded that government should pay for the losses and damages incurred.

Urban and rural development minister Sophia Shaningwa announced last week that government had decided to suspend the mass housing programme because there is no money and pending an investigation into its implementation.

Power-Oyeno Group, a company awarded a N$580 million contract last year, wrote to the National Housing Enterprise, explaining the financial implications of suspending the project.

The contract situation of Power-Oyeno is a reflection of some 24 other companies who got the N$2,98 billion mass housing contracts.

In his letter dated 8 June 2014 and sent to NHE chief executive officer Vinson Hailulu, Power-Oyeno Group managing director, Paulo Shipoke, illustrated the consequences of suspending the work and the direct and indirect costs that will form part of their claims submission.

“We therefore give notice to claim in terms of the clause for extension of the date for practical completion of the permanent works, with costs, loss and expense,” he said.

The company said the contract makes room for the construction to be suspended for 84 days from 4 June 2015.

However, Shipoke said, should the suspension exceed those number of days and NHE does not answer in the affirmative to their letter to resume work in 28 days, then they will regard this as a repudiation of the contract by the state.

In this event, he said, they reserve the right to act in accordance with clause 9,3 which claims damages from government including losses and profits that they were set to get.

Shipoke said government will have to pay for, among other things, the general costs, head office and regional office overheads, as well as costs associated with protecting the work done at sites.

In addition, Shipoke said government will also have to pay sub-contractors’ claims for damages, loss and expenses as a result of the suspension.

He stated that government will have to foot his company’s legal fees and protect it from lawsuits by suppliers and subcontractors.

Shipoke explained to Hailulu the impact of the suspension to the workers saying they have supply and fix subcontractors with a combined labour force of 1 300 on site.

“We have 27 suppliers in and around Swakopmund and Walvis Bay, and spend around N$15 million on suppliers and N$5 million on labour per month,” he said.

Shipoke said the withdrawal of such finances from the Swakopmund and Walvis Bay sites will have a negative impact on the community’s livelihood.

“The construction activities around the deprived DRC community in Swakopmund, including the over 200 workers employed by the DRC residents-owned company directly involved in the project will deprive this community of a significant source of income,” he said.

The firm pleaded with the government not to prolong the suspension of the programme.

“We thus hope that the suspension will be as short as possible to minimise the negative impact on and suffering of the community,” he said.

Sources told The Namibian yesterday that some suppliers have already given the company a week to pay up or face lawsuits.

The sources also said Power-Oyeno stands a chance of being paid over N$1,5 million per month while the project is iced.

This amount will go up by more millions when the claims by 55 sub-contractors are added. The government already owes Power-Oyeno over N$100 million.

Efforts to get comment from Shipoke were not successful. SMSes and emails sent to him were not answered. Hailulu was also unreachable as he has been out of the country since last week.

Another contractor, who did not want to be named, said his company has not been paid since November last year and that his workers are now demanding severance packages.

Meanwhile, a minister, who declined to be named, said the project will soon resume but said the reluctance by NHE not to renegotiate all the mass housing contracts is one of the reasons for the suspension.

Last year, former housing minister Charles Namoloh ordered NHE to renegotiate the mass housing contracts after realising that most companies that won construction tenders overcharged government. This order has been ignored up to now.

“I’m not sure why NHE did not renegotiate the contracts. Because even the former President agreed that the contracts must be re-done,” said a source.

The latest move is aimed at stopping the rot of the project, which includes the escalating prices of the houses and is affected by slow progress in terms of the contraction of houses.

Some people who received houses have already complained about their unaffordability, despite promises that a house would go for as low as N$650 000 per unit.

Other top officials are lobbying the government to stop constructing houses altogether and instead opt to service land on a mass scale.

A minister who declined to be named, said the aspect of giving people serviced land might be introduced in order to cater for those who want serviced land instead of finished houses.

Source : The Namibian