25 October 2018

Namibia: Paragon's Airport Deal Challenged

A PRIVATE company has accused the Namibia Airports Company of breaking national procurement laws to give Paragon Investments a three-year contract to run a duty-free shop at Hosea Kutako International Airport.

The NAC awarded Paragon Investment Holdings, which is owned by businessmen Desmond Amunyela and Lazarus Jacobs, a contract extension two weeks ago. But there are concerns that the parastatal broke national tender rules to suit Paragon, which has been running the duty-free shop since 2007.

The tender, whose bids closed on 31 July this year, had a shortlist of six companies - Dufry & Earth Retail, Future Fresh 1990 Duty-Free, Paragon Investment, Oshitayi Ventures, Sky View Investment and Cathral Investment.

However, the NAC cancelled the tender, and gave Paragon a new three-year contract to run the duty-free shop, which has been one of Paragon's cash cows over the years, bringing them close to N$200 million in revenue over five years.

Disgruntlement has been raised about why the NAC cancelled the tender, and how it went about it.

Lawyer Richard Metcalfe, who is representing Future Fresh 1990 Duty-Free, requested the NAC to provide them with certain information, or face a court challenge on this deal.

Metcalfe asked the NAC to explain whether the parastatal followed the national tender laws when it gave Paragon the three-year extension.

The lawyer also asked the NAC to state why they cancelled the tender, and who had authorised the termination.

"It evokes great suspicion for the tender bid cancellation to have been sent at 18h15 on 20 October 2018 (which was a Saturday), and to be backdated some 10 days earlier," Metcalfe said.

He added: "The manner in which this matter has been dealt with by you as the acting chief executive officer (Lot Haifidi) defies all reason in logic and the law pertaining to corporate governance".

Metcalfe asked the NAC to answer his questions by 29 October 2018, or face a court challenge.

There are complaints that the NAC bypassed its own rules, including the failure to evaluate the tenders as required by law.

Sources said tender cancellation letters dated 10 October 2018 were issued to all bidders on 20 October, and that no reasons were provided for the cancellations.

The NAC gave Paragon Investment a contract to operate the duty-free shop on condition that they relocate the current shop to make room for passenger space upgrades.

Amunyela, who confirmed the contract extension last week, promised to answer questions sent to him.

NAC spokesperson Dan Kamati told The Namibian yesterday that the retail space which was envisaged for the advertised tender was reduced significantly, which materially changed the condition of the tender as it related to the space.

"As a result of that, the tender had to be cancelled due to the renovations to be made at Hosea Kutako International Airport necessitated by the security upgrades at the airport, and the subsequent country security audit by the International Civil Aviation Organisation (ICAO), scheduled for November 2018," he said.

According to him, the tender evaluations were not done "because the tender was no longer relevant due to the changes".

"Besides that, the tender document also stipulated that the NAC reserves the right not to evaluate the tender. There were material changes to the tender specifications, hence the non-evaluation of the tender," he stated.

Kamati said the NAC was under no obligation to state reasons.

"This was clearly stipulated in the tender document and the bidders were aware of that," he added.

The spokesperson claimed that the NAC was placed in a risky position due to the urgent security upgrades that needed to be effected at the HKIA.

"In order to meet the deadline of the ICAO country security audit, the NAC as an airport operator had to make certain renovations and facility re-alignments, which affected the retail spaces leased to Paragon and other retailers," he added.

Kamati said an urgent meeting was held this month with all directly affected parties to explain the urgency of the matter.

"Paragon had an existing contract with the NAC, which had a three months' notice period. However, giving Paragon the required notice period would have been an exercise in futility as these renovations and facility realignments needed to commence on 12 October 2018," he said.

Thus, an agreement was reached that Paragon and other retailers would be moved to other locations in the departure area/hall of the airport.

"Part of the agreement was that Paragon would pay for their own relocation. Over and above that, Paragon would have stood to lose a significant amount of money due to the urgent upgrades," he noted.

Kamati added: "In order to compensate the company for their loss, a three-year contract was agreed upon. Paragon and other retailers must be commended for having acted patriotically to assist in the process as they had a legitimate basis not to move."

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