Con­tract to de­liver staff ve­hi­cles fails

Only 283 of 3,868 ap­proved ap­pli­cants have re­ceived their cars

Daily Dispatch - - NEWS - MPUMZI ZUZILE

What needs to be noted here is that pre­vi­ous con­tract struc­tural glitches con­tributed to the con­tract not be­ing run ef­fi­ciently

A five-year con­tract awarded in 2015 for the pur­chase of sub­sidised ve­hi­cles for thou­sands of govern­ment em­ploy­ees has failed to de­liver even 10% of the ve­hi­cles or­dered in al­most three years.

To date, a mere 283 of the 3,868 ap­proved ap­pli­cants have re­ceived their ve­hi­cles.

In October 2015, Mmela Fi­nan­cial Ser­vices was awarded a five-year con­tract by na­tional Trea­sury to pur­chase sub­sidy ve­hi­cles on be­half of thou­sands of govern­ment em­ploy­ees.

Na­tional Trea­sury spokesman Jab­u­lani Skhakhane said: “Since the com­mence­ment of the con­tract in October 2015, 3,868 ap­pli­ca­tions were ap­proved af­ter go­ing through the credit process check and 2,053 ap­pli­ca­tions were sub­mit­ted for or­der­ing with man­u­fac­tur­ers. Of the 2,053, only 1,314 ve­hi­cles were or­dered as of 12 June 2018.

“An­other 123 ve­hi­cles are at deal­er­ships for col­lec­tions and 283 were al­ready de­liv­ered.”

Asked why it took so long to de­liver ve­hi­cles, Skhakhane said Mmela was pro­cess­ing ap­pli­ca­tions as re­ceived from the var­i­ous de­part­ments, and govern­ment was mon­i­tor­ing the de­liv­ery of re­quired ve­hi­cles ac­cord­ing to or­ders placed.

“The pay­ment to the sup­plier is strictly through the govern­ment pay­roll sys­tem, fol­low­ing the regis­tra­tion of the ve­hi­cle in the of­fi­cial’s name and only af­ter the ve­hi­cle has been de­liv­ered.

“Govern­ment does not guar­an­tee to sup­ply a spe­cific num­ber of ve­hi­cles to be fi­nanced as the num­ber of units may vary from year to year,” Skhakhane said.

Ac­cord­ing to of­fi­cials within the depart­ment of trans­port who wished to re­main anony­mous, Mmela has been strug­gling to se­cure a fi­nan­cial backer for more than two years and only man­aged to se­cure one in March this year.

Mmela Fi­nan­cial So­lu­tions’ Em­manuel Sel­wadi con­firmed the com­pany had only de­liv­ered 283 ve­hi­cles.

“The con­tract does not stip­u­late the min­i­mum num­ber of units to be sup­plied nor does it guar­an­tee the num­ber of ve­hi­cles to be fi­nanced. The three-month gap between the pre­vi­ous con­tract and the new award re­sulted in muted in­ter­est from fi­nan­cial in­sti­tu­tions in view of the low em­bed­ded mar­gins.

Sel­wadi said more than R101-mil­lion had been paid to ve­hi­cle man­u­fac­tur­ers for pur­chas­ing ve­hi­cles.

“Over R600-mil­lion is ear­marked for orig­i­nat­ing new as­sets. In re­turn, govern­ment has made pay­ments against R9.7-mil­lion in ser­vic­ing the loan,” Sel­wadi said.

Asked why they had failed to sup­ply sub­sidy ve­hi­cles in al­most three years, Sel­wadi blamed the pre­vi­ous con­tract for the de­lay.

“We have ful­filled our man­date. What needs to be noted here is that pre­vi­ous con­tract struc­tural glitches con­tributed to the con­tract not be­ing run ef­fi­ciently,” he said.

“Now that mat­ters have been sorted out, we be­lieve the con­tract will per­form op­ti­mally.

“At present, just un­der 2,000 ve­hi­cles have been or­dered from var­i­ous man­u­fac­tur­ers, 171 of which will be de­liv­ered over the next few weeks. We have com­mu­ni­cated this to the State through its var­i­ous fo­rums.”

When asked about their fi­nan­cial sta­tus to de­liver on the con­tract, Sel­wadi said: “Mmela has met and con­tin­ues to in­ter­act with both lo­cal and in­ter­na­tional fi­nan­cial in­sti­tu­tions. The start of the new RT 68 (Trea­sury agree­ment) in 2015 was de­ferred for nine months to about the third quarter of 2016 as govern­ment was in­stalling its new IT sys­tem.

“This made po­ten­tial in­ter­na­tional in­vestors lose in­ter­est in the trans­ac­tion which led to the can­cel­la­tion of their man­date.”

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