Namibia: Ugly Pay Spat Erupts Between Namibian and Italian Companies

22 January 2019

Windhoek — An ugly spat between a local company, Khomas Civil Construction (KCC), and an Italian company called the Enertronica Group (EG), is brewing as accusations and counter-accusations are being thrown about by the two entities. EG, last year erected a five-Megawatt solar power plant in the Erongo Region for which it employed KCC to complete specific construction work.

According to the owner of KCC, Bertie Morkel, EG refuses to settle an outstanding amount of about N$500 000 for work already completed. However, a consultant for EG, Maurizio Decinti, from a South African company called Decinti Consulting, who says he was appointed by EG to manage all finance and accounting matters, has strongly rejected the claim, saying that KCC in fact owes EG money.

"The reason is for having collected VAT (Value Added Tax) from Enertronica in the region of more than R1 million without him being registered at Receiver of Revenues for VAT purposes. Therefore, the client (Enertronica) paid 15 percent more for his services than what contractually due. RoR (Receiver of Revenue) informed that the VAT paid is not claimable because Khomas Construction is not a VAT vendor. Subsequent to our claim, Khomas applied for registration but only effective from 01.08.2018 while his invoices were all dated 2017. The VAT registration cannot be backdated. This has resulted in a fraud against Enertronica and also against the Namibian Inland Revenue services. Khomas owes Enertronica more than R1 million and the amount kept by Enertronica as a retention of the work done is less than R500k. This leaves Enertronica with a loss of more than R500k," Decinti claimed.

Decinti continued that he has instructed a local legal firm to recover outstanding money and to lay criminal charges against KCC to pay back the 15 percent VAT charged on supplies.

However, KCC's Morkel is adamant that a contract signed with Enertronica stipulates that no funds may be retained by Enertronica for work completed. In addition, he claims he will deal with the VAT issue himself, claiming it is a matter between Khomas Civil Construction and the Receiver of Revenue. "They have no right to withhold my payment. They should pay me and then charge me with the Receiver of Revenue. I am willing to deal with the fraud charge but what matters is that they pay me what they owe me," charged a visibly upset Morkel, adding that Enertronica is looking for loopholes to get out of the payment obligations.

Local financial institutions, Bank Windhoek, financed the construction of the Trekkopje Solar Project, in the Erongo Region, which was constructed by Enertronica. The project incurred construction costs of N$137 million, excluding development costs and was completed and operational in August 2018.

The project has a combined output of 5,78 Megawatts but is expected to be higher because of the high performance of the technology adopted for this specific plant.

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