NSSA holds on to Beitbridge Hotel

AS the National Social Security Authority (NSSA) board sifts through the wreckage of the previous management’s “calamitous” investment deals such as the Beitbridge Hotel and Celestial Park in Harare, a decision has been made to keep the assets until the Authority gets value from them.

The NSSA board, led by Mr Robin Vela, had indicated that it was going to assess the viability of some of the investments and consider withdrawing from unviable ones.

Mr Vela told our Harare Bureau last week that while plans to pull out of some shoddy investment deals remain on course, it would be appropriate to do so gradually.

“Yes, some of those (bad) investments were things like Beitbridge Hotel but ultimately, we can’t just pull out.

“We need to ensure that we get value from the investments. If you look at even Celestial Park, we have had to patch it up and we have had to make it as fully tenanted as we can.

“In this environment (of inflation), holding on to property is better that holding on to cash,” said Mr Vela.

According to documents seen by our Harare Bureau, it might take NSSA up to 278 years to recover its investment.

In other words, it is almost difficult for NSSA to generate any meaningful return from the property unless it is disposed to interested bidders.

A 668-page forensic audit report done by Grant Thornton also raised concern on the seemingly inflated cost of acquiring another property, Celestial Park in Harare’s Borrowdale suburb.

The audit report points to a sloppy tendering process in engaging an out-of-sorts contractor for the project, Costain Zimbabwe; inordinate delays in construction, which negatively impacted on the cost; and endless alterations to the terms of the contract between NSSA and the contractor.

The scope of the project also changed midway.

The anomalies saw NSSA being fleeced of $30 million through inflated project costs.

In terms of the Beitbridge Hotel, a brainchild of Government’s 2006 push to redevelop the border town, initial costs suggested that it would costs $3 million to construct a 140-room hotel.

However, the forecast was based on incomplete drawings and architectural designs.

When the initial tender to identify the major contractor was then floated on October 30, 2009, NSSA put the pre-tender estimate at $18,9 million.

The tender had to be re-floated in February 2010 after bidders were deemed to have failed to meet the specifications of the tender.

After several other tendering processes, NSSA ended up paying $44 million for the project, under unclear circumstances. The auditors concluded that using the $50 per night per room rate that was being used by NSSA, it would take 278 years to recover its investment.

“Assuming an average rate per room of $275 was to be charged at Beitbridge Hotel, the payback period would be about 51 years,” said the auditors.

But rates of between $200 and $300 are typically charged by five-star hotels.

On the Celestial Park investment, it emerged that the purchase price of $32 million could have been inflated given that BARD Real Estate Company had done a valuation for the property on May 27, 2014, and rated it at $24 million.

GreenPlan Limited — a company owned by a director who used to do business with NSSA before — also did a valuation of the property and put it at $36,5 million as at June 15, 2014. Interestingly, the GreenPlan report had been compiled 19 days later.

However, only the GreenPlan report found its way to both the management and investment board committees, and auditors believe management could have used the BARD report to negotiate a favourable price for Celestial Park. GLOBAL gold demand fell to an eight-year low in the third quarter of 2017 following a “softer quarter” of demand in the jewellery sector and significantly lower inflows into exchangetraded funds (ETFs), latest data from the World Gold Council (WGC) shows.

The ‘Gold Demand Trends’ report for the third quarter shows a nine percent year-on-year decline in gold demand to 915t, the lowest level since the third quarter of 2009. The year-to-date gold demand decreased by 12 percent.

WGC member and market relations head John Mulligan told Mining Weekly Online that the third quarter proved to be somewhat challenging for gold demand, but that the drop had masked some underlying factors.

Global jewellery demand contracted by three percent to 479t during the quarter under review, accounting for 17t of the yearon-year decline, as the newly introduced three percent goods and services tax and tighter anti-money-laundering regulations around transactions in India deterred buyers.

The deterioration marked the weakest third quarter in the WGC’s 17-year data series for jewellery demand, the report noted, with year-to-date demand of 1 457.3t – only three percent higher than in 2016 – showing a “very weak year” for jewellery demand.

After three consecutive quarters of growth, demand in India plunged 25 percent year-on-year to 114.9t in the third quarter, while gold jewellery demand in mainland China recovered to 159.3t, a 13 percent improvement year-on-year, after a consecutive run of 10 contractionary quarters. However, China’s recovery remains weak from a longer-term

perspective, with demand 15 percent below the five-year quarterly average of 187.1t.

While ETFs recorded positive inflows of 18.9 t, this was 87 percent lower than the unprecedented high of 144.3 t recorded in the third quarter of 2016.

“Investors continued to favour gold’s risk-hedging properties, but the greater focus was on buoyant stock markets,” the report commented. — Miningweekly

percent stake. We also have the Tokwe-Mukosi Dam where a number of projects that call for architectural and artisanal expertise will be rolled out,” said Dr Chimedza.

“My wish is to help local companies to get tenders and participate in the massive job. I will also, in my capacity as your minister here, advocate for your inclusion in the project which will be financed by Austrian contractor, Geiger International.”

The minister said substandard contractors have no room in capital projects, hence the need to have capacity to provide quality products or services.

“The question of time and quality plays an important role in all contracting work. We should be able to second local contractors to do massive projects based on their pedigree to finish the works within the stipulated period,” he said.