Sanral may claim damages from Aveng and Strabag for ‘abandoning’ its project
Struggling construction group Aveng’s woes may pile up if the SA National Roads Agency (Sanral) claims damages for unfinished work on what was set to be one of the world’s highest bridges.
The agency hinted on Tuesday that it might well pursue a claim against Aveng and its Austrian partner Strabag, which stopped work on the proposed R1.65bn Mtentu Bridge on the Eastern Cape’s Wild Coast.
While the companies cited community opposition and violent protests for the stoppage of work on the 220m high bridge, the road agency said that it suspected this might be an excuse, and the real reason might have been Aveng’s dire finances. “The contractor is not being transparent about its true reasons for abandoning site, but Sanral suspects that the publicly known financial challenges of Aveng may have contributed to the decision.”
Sanral said the national and provincial governments had taken the necessary steps to ensure worker safety.
A hefty fine for unfinished work will be a blow to the struggling Aveng.
The group, which has lost more than 99% of its value in the past five years, has taken steps to prop up its balance sheet, including selling unwanted assets and undertaking a 2018 rights issue, which raised R493m. Aveng on Monday said that the joint venture had made provision for a R245m performance and an R81.7m retention money guarantee in respect of the Mtentu Bridge.
Sanral, which is responsible for improving, maintaining and managing 94% of SA’s national road network, on Tuesday slammed the joint venture for “abandoning” the project.
Sanral issued a notice of termination to the joint venture on Tuesday for abandoning the construction site. It said it was now following “due process”.
Sanral spokesperson Vusi Mona said work on the project was suspended on October 22, 2018 due to community protests for local employment at the site.
The N2 Wild Coast road political oversight committee, chaired by Eastern Cape transport, safety and liaison MEC Weziwe Tikana, had led negotiations with all stakeholders to find a solution to the problem and ensure resumption of the project, Mona said.
He said a resolution on key issues had been reached with the community and other local stakeholders earlier in February.
“A process to resolve all of the remaining issues was agreed to. A process was also agreed to address any future issues without stopping work and it was resolved that progress on the bridge construction could resume unhindered” from January 14, he said.
Sanral said it had been trying to persuade the contractor to return to site to resume work since the beginning of the year.
The roads agency has had financial woes of its own. These saw the entity recently cut back on issuing new construction tenders. Sanral in 2018 said that it wanted to raise about R600m in capital markets in order to fund projects.
Aveng’s share price was unchanged at 5c on Tuesday. In its heyday, in August 2008, Aveng traded for just less than R70 a share.