New Mass Housing Prices [analysis]

The Ministry of Works and Transport has compiled a new mass housing price guideline that proposes lower charges per square metre to curb the exorbitant charges made by the companies which won the tenders.

The price guideline has already been submitted to the Ministry of Regional and Local Government and Housing and Rural Development for consideration and implementation.

Local government minister Charles Namoloh confirmed to The Namibian yesterday that his ministry received the price guideline from the works ministry that was roped in for the mass housing programme to offer technical expertise.

Most companies that won construction tenders overcharged government, with one such company raking in more than N$20 million for just getting the job which they subcontracted for more than N$150 million.

The Namibian understands that part of the recommendations are that the companies should reduce their prices by between 15% to 30%.

Namoloh said the ministry found that there are companies that were charging beyond the 15% to 30% threshold, and that he will issue a ministerial statement next week on the matter.

Initially, the companies were asked to charge below N$5 000 per square metre but most of them charged higher than the set benchmark. As a result, government had ordered the National Housing Enterprise to renegotiate all the contracts.

According to sources, the works ministry suggested two weeks ago that prices for core five should be N$5 694 per square metre core six at N$5 119 core seven at N$5 114 core eight at N$4 712 core nine with 110 external wall at N$4 907 core nine with 220 external wall at N$5 093 Falcon M at N$5 000 Naute at N$4 846 and Onduli at N$4 779.

CORE 6 HOUSES

To illustrate the money gobbled by the middleman companies, The Namibian picked one of the tenders and analysed the prices.

Ferusa Capital Financing Partners was awarded the tender for Swakopmund to build 600 houses at N$173 million. The company charged N$5 951 per square metre, instead of the N$5 000 threshold.

The company then subcontracted the job for about N$150 million, leaving about N$23 million in their pockets just for getting the tender and doing nothing.

A sub-constructor, who spoke on condition of anonymity, said some of the companies which get the jobs from the middlemen, charge a 5% risk factor fee, which arises from the fact that most companies awarded mass housing tenders are inexperienced. This, undoubtedly, the source said, pushed up prices.

Registered in July 2011, Ferusa Capital Financing Partners is owned by the Akwenye brothers – Tobias and Nelson, who also owns an assortment of businesses.

Efforts to get comment from him were unsuccessful as he was allegedly in Brazil.

THE REAL DEAL

The works ministry proposed that a core six house which refers to a two-bedroom house with a kitchen, toilet and a bathroom measuring 42 m2 be priced not more than N$220 000 and that the rate be less than N$5119.

Several companies have overcharged from that range, among them 7 Sirs Group which charged N$239 000 per two-bedroom house. Calculations by The Namibian show that in that category alone, government might recoup N$4, 2 million from 7 Sirs Group since they overcharged by N$19 000 per house for the 230 core six houses they are tasked to build.

The category of core six is one of nine type of houses that are set to be built under mass housing – ranging between N$201 00 and N$330 000 houses.

Middlemen in both Windhoek and Karasburg charged N$250 000 per core six house. Calculations show that government could recoup N$5 million and N$750 000 from the two companies in one category alone.

Mariental, Omuthiya, Oshikuku, Oshakati, Okahao, Otavi all charged N$243 000 per core six cause, which means government, according to the latest prices thresholds, was overcharged by N$1,6 million for the construction of 161 core houses at those five towns.

The middlemen at Zambezi asked for N$221 000, Nkurenkuru N$212 000, Khorixas N$211 000, Keetmanshop N$240 000, Outjo N$221 000, Opuwo N$193 000 and Gobabis N$236 000. Middlemen at Henties Bay charged N$201 000 while their counterparts at Katima Mulilo quoted N$231 000.

A Falcon M which covers an area size 68.04 m2 should not exceed N$310 000, a Naute not more than N$320 000, whereas for a Onduli not more than N$330 000 should be charged.

MIDDLEMAN DILEMMA

Two other companies that were awarded mass housing tenders in Swakopmund, charged different prices from Ferusa for constructing the same core houses.

Power-Oyeno, which is building 2 034 houses in Swakopmund is charging N$5 910 per square metre while Delta Group Holdings that will put up 400 houses asks for N$5 297 per square metre. Another company, 7 Sirs Group, which has a contract to build 1 595 units in Walvis Bay, wants N$5 700 per square metre.

The Namibian understands that several middlemen and some tenderpreneurs, who went on shopping sprees, to buy TV screens worth N$100 000 and vehicles before work has started, have tried to bribe top officials at the housing ministry to be on their side.

ANTI-CORRUPTION

One of the officials who opposed the prices charged to NHE, was Gabriel Castro, the aiser to the Minister of Regional and Local Government and Housing and Rural Development, Charles Namoloh.

“We should cut out the middleman as it does not add any value to what we are doing because it costs a lot. There are people making money for doing nothing,” Castro said in an earlier interview with The Namibian.

He conceded that the middleman firms are a result of a political decision aimed at empowering indigenous people but said the practice is pointless if government does not monitor real progress.

“The government should motivate and facilitate the participation of younger Namibians with the aim of building capacity and not to enrich people in a very short time,” he said.

MASS HOUSING WORKERS AFFECTED

Construction workers in the mass housing project at the coast have in the past complained about delayed payment of their salaries while work in Windhoek has not yet started.

Construction workers at Walvis Bay claimed that they received their salaries two months after they started work.

The 7 Sirs Group is in partnership with Namibian businessman Collin Venaani who is known as ‘Mr Bentley,’ a younger brother to DTA president McHenry Venaani. The delay in payment resulted in workers downing tools at some point last month as some workers who mostly earn between N$8 to N$12 per hour complained.

“Our workers are resigning as there is no financial compensation. I lost experienced workers as a result of this delay. Out of 17 people I employed, only six are left. The rest resigned as they refuse to wait for their money that long,” said one senior worker who spoke to Nampa on condition of anonymity.

7 Sirs Group director Alvin Naidoo also agreed that the employees return to work and that their salaries would be deposited into the sub-contractors’ accounts by yesterday.

A manager of one of the sub-contractors admitted the chain of the flow of funds from NHE, to the contractor. Sub-contractors had also affected their access to the funds. NHE transfers the money to a bank in South Africa for the main contractor and then the money comes back into Namibia to the sub-contractor.

The sub-contractors also revealed that they do not have signed contracts with 7 Sirs and that their agreements were verbal because they were desperate for the job.

Source : The Namibian