R11BN COEGA IN­VEST­MENT IN JEOP­ARDY

CityPress - - Business - MAX MATAVIRE busi­ness@city­press.co.za

The com­ple­tion dead­line for South Africa’s largest mo­tor in­vest­ment in 40 years will most likely be missed fol­low­ing dis­agree­ments be­tween small lo­cal busi­nesses and the main con­trac­tor over the al­lo­ca­tion of work.

This adds to the note of gloom fol­low­ing the an­nounce­ment by Gen­eral Mo­tors SA last month that it would exit the coun­try be­fore the end of the year, re­sult­ing in the loss of more than 500 jobs.

The R11 bil­lion car plant at the Coega in­dus­trial de­vel­op­ment zone in Port El­iz­a­beth, a joint ini­tia­tive be­tween China’s Bei­jing Au­to­mo­tive In­ter­na­tional Cor­po­ra­tion (BAIC), which is the ma­jor­ity share­holder with a 65% stake, and the In­dus­trial De­vel­op­ment Cor­po­ra­tion (IDC) is a prod­uct of 26 bi­lat­eral agree­ments signed be­tween China and South Africa in 2015.

It was launched in Au­gust last year with con­struc­tion ear­marked to start in De­cem­ber the same year. The plant was meant to be fully op­er­a­tional dur­ing the first quar­ter of 2018.

The hold-up is a dis­pute be­tween BAIC SA and small, medium and mi­cro en­ter­prises (SMMEs) af­fil­i­ated to the Na­tional African Fed­er­ated Cham­ber of Com­merce and In­dus­try (Naf­coc) in Nel­son Man­dela Bay.

About 2 500 jobs are ex­pected dur­ing the con­struc­tion phase of the plant that will pro­duce trucks and sport util­ity ve­hi­cles.

The 47-hectare site ear­marked for the project re­mains un­touched with no sign of con­struc­tion ma­chin­ery.

The IDC this week could not give a fore­cast for when the project would start.

“It will start as soon as all re­quire­ments are met,” IDC spokesper­son Mandla Mpan­gase told City Press with­out ex­plain­ing fur­ther.

At a re­cent stake­hold­ers’ brief­ing held at a Port El­iz­a­beth ho­tel and hosted by the IDC, Naf­coc threat­ened to stop con­struc­tion if its af­fil­i­ated SMMEs were not rea­son­ably in­volved in the project.

Naf­coc Nel­son Man­dela Bay has 10 af­fil­i­ates that are women- and youth-owned busi­nesses and rep­re­sents small busi­nesses which are mainly black-owned.

A source close to the dis­cus­sions told City Press that Naf­coc sec­re­tary-gen­eral Mandla Msizi had been asked to de­sist from mak­ing “harsh” state­ments as the mat­ter was “sen­si­tive” and would likely jeop­ar­dise the in­vest­ment.

“We will not com­ment on the project as we are cur­rently in dis­cus­sions with BAIC SA,” said Msizi when ap­proached for com­ment.

Hint­ing that there were prob­lems with the deal, the IDC’s Mpan­gase told City Press ne­go­ti­a­tions with Naf­coc were on­go­ing.

“The project own­ers have in­cluded a sig­nif­i­cant role that SMMEs will play in the project. All work pack­ages – paint shop, body shop and ex­ter­nal works – in­clude a sig­nif­i­cant por­tion al­lo­cated to SMMEs.”

The Nel­son Man­dela Bay Busi­ness Cham­ber said it was also talk­ing to BAIC SA re­gard­ing the in­volve­ment of its mem­bers.

“We have been en­gag­ing with the IDC and the ma­jor­ity share­holder over the past cou­ple of months in terms of get­ting lo­cal mem­ber com­pa­nies of the busi­ness cham­ber reg­is­tered on the BAIC SA data­base for the pur­poses of lo­cal pro­cure­ment of goods and ser­vices,” the cham­ber said.

Naf­coc’s main gripe seems to be the strin­gent con­di­tions stip­u­lated by the main con­trac­tor – Bei­jing In­dus­trial De­sign­ing and Re­search­ing In­sti­tute (BIDR) – for SMMEs to qual­ify.

Some of these re­quire­ments are that SMMEs must reg­is­ter on the com­pany data­base be­fore be­ing in­vited to sub­mit bids for work; work will only be given to SMMEs with ten­der prices that are com­pet­i­tive and mar­ket-re­lated; ten­der of­fers will first be eval­u­ated for func­tion­al­ity and those that meet the re­quire­ments will then be scored us­ing a point sys­tem and a broad-based black eco­nomic em­pow­er­ment score­card.

The BIDR has also clas­si­fied the SMMEs ac­cord­ing to the rat­ings of the Con­struc­tion In­dus­try De­vel­op­ment Board, which keeps a na­tional reg­is­ter of con­trac­tors, and will al­lo­cate work based on these rat­ings.

“The BIDR has di­vided the con­struc­tion of the project into six main con­tracts. The de­vel­op­ment agree­ment that the BIDR has signed with BAIC SA de­ter­mines that a min­i­mum of 35% of the over­all con­struc­tion cost must be awarded to lo­cal SMMEs,” BAIC SA said.

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