29 January 2013

Namibia: Neckartal Costs Increase By N$500 Million

THE delay in the awarding of the tender for the construction of the Neckartal Dam in the South will cost the taxpayer about N$500 million more than the government's original estimate.

The tender closed on January 21, with three companies in the race for the multi-billion-dollar project.

Government's own estimate of the project is about N$2,2 billion but that has escalated by about 22%, since the company with the lowest bid is CSC Neckartal Dam joint venture Stefanutti Stocks and CMC de Ravenna (Italy) that tendered N$2,72 billion for the project.

Last year, then Finance Deputy Minister Calle Schlettwein warned that the delay in the awarding of the tender would increase the costs and that it should be completed as soon as possible.

The tender was supposed to be awarded in December 2011 but due to alleged irregularities and the Tender Board's failure to agree on which company should get the job, it was re-advertised in 2012.

During the first round of the tender the difference in costs between the two companies that were in the race, namely a Chinese company, China Henan International Corporation (N$1,9 billion), and the Italian company Impregilo (N$2,8 billion), was about 45%.

This time the difference in cost between the lowest and highest bidder is 5,6%.

The highest bidder is Vinci Construction, Grant Projects (France) joint venture Orascon (Egypt) that tendered N$2,876 billion, while Salini SPA (Rome) quoted N$2,874 billion.

According to media reports Salini and Impregilo, who was initially granted the controversial tender, in September last year agreed to cooperate to bid more competitively in the world construction market.

Impregilo was fined by a Lesotho court for bribery and corruption in the Lesotho Highland Water Project.

The Ministry of Agriculture, Water and Forestry budgeted N$3,25 billion for strategic water supply infrastructure development. This figure, apart from the construction of the Neckartal Dam, also includes the cleaning of the lower part of the Fish River channel, the completion of the construction of the water supply schemes to the settlements of Aus and Grünau as well as the reconstruction of the Hardap Dam.

With the increase in the cost of building the Neckartal Dam, only 16% of the total amount budgeted could be used for other strategic water supply infrastructure development projects.

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