RCC in Financial Crisis

THE Roads Contractor Company (RCC) has been plunged into financial turmoil despite getting numerous road construction tenders from its line ministry as a bail-out strategy.

Sources reveal that RCC’s relationship with the Roads Authority (RA) has, however, turned sour following repeated substandard road construction projects.

The Namibian understands the RCC has been pleading with the Ministry of Works and Transport to be given more work and preferential treatment by the Roads Authority on the strength that it is government-owned.

While the RA has reportedly tried to give RCC preferential treatment in awarding it road contracts, RA has ended up dissatisfied with the way the RCC handles these contracts.

Sources told The Namibian that RCC has allegedly been sub-contracting other companies, especially Chinese firms, to work on the jobs it gets after requesting for preferential treatment in the awarding of the tenders.

This has allegedly peeved the RA and the Ministry of Works officials since the RCC’s mandate is to do the actual road construction itself. The company has been criticised for operating like a middleman when its equipment is underutilised.

The allegedly cash-strapped RCC, which is on the verge of bankruptcy, this year allegedly approached the Ministry of Works and the RA in an attempt to beg for more work. The request was allegedly not taken lightly.

The latest issue of the Tender Bulletin reveals that the RA has been awarding a large number of its road-building contracts to RCC and to Chinese companies in Namibia without going on public tender.

Recently, the RA apparently bypassed competitive bidding procedures by directly awarding the bulk of tenders to the RCC, with only a handful going out on public tender.

The RCC’s financial woes are in the public domain with recent reports that the parastatal owes government over N$160 million in unpaid taxes. The RCC has been the subject of civil litigation over unpaid debts and has pumped millions into its loss-making subsidiaries such as Brick amp Concrete Industries (BCI). Steps to liquidate BCI have already started.

The Tender Bulletin also reveals that the RA, has over the last three years, issued a total 171 tenders publicly of which 79 were for civil works and 22 for consulting and management of contracts relating to road building out of 52 tenders. The other 70 publicly-issued tenders were for aertising of electrical appliances and other equipment, while the remaining 30 went to administrative functions, including one for a review of the RA’s procurement systems.

Some of the contracts awarded to RCC without going on public tender are the government hangar road the MR91 from Gobabis to Aranos Ovitoto bridges, whose construction cost is estimated at N$74,8 million the bitumen and gravel roads maintenance and the TR15 Tsumeb-Katwitwi gravel road.

Contacted for comment, RCC general manager for Business Development, Properties and Corporate Services, Gerson Karaerua, denied that the parastatal was facing financial woes and said that any business operation is subject to supply and demand factors.

“Thus, if there is no demand for a particular service or product, that business selling the services and products will experience a decline in revenue. RCC is not immune to these factors,” he said.

Karaerua also disputed allegations that the company has requested the RA for special preference or that it was sub-contracting Chinese firms.

“In fact, none of our sub-contractors are Chinese. The RCC has never sub-contracted any work to any Chinese company,” he said.

Karaerua, however, declined to reveal how many road tenders the RCC has received from RA or the cost involved.

“When constructing a road, there are certain activities that are usually sub-contracted to various third parties during the whole construction period. This practice is normal in the industry and as such, RRC does subcontract certain activities to third parties as part of its empowerment initiative, which is done on a need basis. Therefore, the decision to subcontract also has a contract requirement perspective,” he said.

Minister of Works Erkki Nghimtina declined to comment on questions concerning RCC’s tenders, referring The Namibian to the RA. “Ministers have nothing to do with tenders,” was all he said.

Questions forwarded to the RA last week went unanswered as the RA’s public relations officer, Hileni Phillemon, was said to be at the Ongwediva Trade Fair.

Source : The Namibian