THE minister of works and transport, Erkki Nghimtina, yesterday was cagey about whether he had given permission for the controversial 50- to 90-year leases of TransNamib property to a company owned by an acquaintance of the parastatal’s chairman, Festus Lameck.
The leases, described as a private-public partnership, were reportedly considered as so bad for TransNamib that the permanent secretary of the Ministry of Works, Peter Mwatile, recommended the board be fired, according to a report in the November edition of Insight magazine.
The lease of prime land along Independence Avenue in Windhoek and in Grootfontein to companies that belong to “acquaintances” of Lameck’s has raised questions of ethical business behaviour.
Yesterday Nghimtina said he could not say whether his ministry, which is the custodian of TransNamib on behalf of the Government, was informed of the deal or had given approval.
Nghimtina said: “That is a complicated question. I’m studying the whole thing. I’m not saying yes or no. I cannot say something now.”
He said he would only be able to speak about the matter “next year”.
Acting TransNamib chief executive officer Eugenia Tjaronda on Wednesday said that their line ministry had been informed about the lease transfer.
Claims were rife this week that Afrikuumba landed the deal because its executive director, Titus Nakuumba, and Lameck are friends.
Nakuumba yesterday said: “There is nothing wrong with being acquainted with Festus Lameck or anybody else. Even though I know the gentleman, it doesn’t mean that’s how I got the business.”
He denied that there were any underhand dealings. “We don't entertain any corrupt practices. To us, it’s above board. We are a company of ethics.”
He said he was awarded the contract after responding to a newspaper advertisement.
Lameck maintained that the deal “was above board and can be explained”.
The rationale behind the deal was because “TransNamib has the fullest mandate to enhance its properties”.
Lameck yesterday admitted that he was part of the decision-making body that took Afrikuumba on board. “Yes, indeed. I am the board chairperson.”
According to him, he and Nakuumba are acquaintances but that did not influence the decision. “You guys are building up innuendos unnecessarily. It's not Nakuumba, it’s a company, for heaven’s sake.”
Asked whether he and Nakuumba have socialised together, he said: “I’m allowed to party with anybody.”
Nakuumba said the tenants in buildings on the land will have two months to move their businesses, depending on whether their business is situated in the area earmarked for a proposed shopping mall or the residential development.
He said the building of the shopping mall would start as early as February next year.
The development of the residential area will start in April, he said. Building is expected to take between 14 and 18 months.
It is not unusual for building projects in Namibia to be delayed, while some never get off the ground.
According to Nakuumba, the entire development will cost N$1,2 billion.
The shopping mallÂ’s lease is 50 years while that of the residential area is 90 years, Nakuumba said.
Currently, TransNamib earns rent of N$240 000 a month from buildings on the property.
Should the project take 18 months to complete, this would mean that they would lose N$4,32 million in rental income.
Some in the know say that for now, and probably for the next three years, TransNamib can kiss goodbye the N$240 000 secured monthly rental income Â– much-needed funds for the cash-strapped road and rail carrier.
It is estimated that the projected monthly income in year four of the development will be N$750 000 per month.
The projected revenue from the residential escrow account will be N$40 million, Tjaronda said.
Nakuumba told The Namibian that they still have to secure the N$1,2 billion funding for the project, despite having giving notice to tenants that they should vacate the property by February.
Last month, Insight reported that TransNamib would only get a 22 percent stake in Fixture Property Investment, while Afrikuumba would have the majority shares of 78 percent.
According to the magazine, TransNamib would only benefit should the joint venture declare dividends – based on its 22 percent shareholding. Given the size of the investment, a declaration of dividends is not expected in the foreseeable future and may only realise when the N$1,2 billion investment is paid off.
TransNamib has a reported property portfolio worth N$10 billion.
A group of tenants of TransNamib erven along Independence Avenue are fuming after their contracts were summarily transferred to the new owners.
They say the transfer of the lease was not done in a transparent manner and there was no tendering process.
Some of the tenants have rented the property for over ten years. “This is a malpractice in business. They’re gonna break all this down. How can they treat us like this?” one asked.
In the letter that the tenants received on December 5, Struggle Ihuhua, the general manager: properties, wrote that “TransNamib Holdings has entered into a long-term lease agreement with Fixture Property Investment (Pty) Ltd for the development of [a] portion of erf ... situated in Independence Avenue, Windhoek, on which premises you are leasing are situated”.
Fixture Property Investment is a joint venture between TransNamib and Afrikuumba Construction (Pty) Ltd.
Also in contravention of what Tjaronda said on Wednesday, Nakuumba yesterday admitted that the tenants had received eviction notices. “I feel for their businesses, but thatÂ’s how the wheel goes.”