Houses 20 years late, R375m over budget
Contractor claimed R7.3m for ‘standing time’ during Covid and R2m for strike
In one of South Africa’s most-delayed and over-budget housing projects, a Free State development for low-income homes which began almost two decades ago remains incomplete, with the budget soaring from R110m to R485m.
Several contractors have come and gone after being paid millions. The 800-unit partly complete development was also badly vandalised after it stalled for several years, piling on extra costs to replace stolen toilets, cables, cupboards and other fixtures.
About 2,400 beneficiaries are waiting for the government to complete the 800 units in Dark and Silver City community residential units.
Auditor-general Tsakani Maluleke has slapped the Free State department of human settlements with a finding of “material irregularity” over the project.
This was after the AG found that contractors were paid millions of rands for “standing time” due to the 2020 Covid-19 government restrictions and strikes in 2021. One contractor submitted a claim of R7.3m for standing time during the Covid lockdown and R2m for a strike in June 2021.
In construction, standing time refers to any interruptions or delays in the project schedule caused by the contractee, in this case the government.
But Maluleke found that the official who cleared or certified the payment was in breach of the Public Finance Management Act, which says an official “is responsible for the effective, efficient, economical and transparent use of financial and other resources within that official’s area of responsibility”.
“An official of the department certified these claims for payment, even though the department had no contractual commitment to pay for the standing time. The official consequently did not ensure the economic use of the financial resources of the department,” Maluleke said in her findings.
“An amount of R8.5m was subsequently paid to the contractor, resulting in a material financial loss for the department.
“The accounting officer responded that the department concluded the claims to be sustainable in terms of the contract and therefore payable. The accounting officer has subsequently not taken the appropriate actions to address the material irregularity.”
Another contractor was paid R9.4m for a similar claim, which the AG also found to be irregular. Maluleke has recommended that the head of department investigate the noncompliance, take disciplinary action and recover the financial losses in both cases.
Maluleke said, “If it appears that the department suffered the financial loss through criminal acts or possible criminal acts or omissions, this should be reported to the police.”
The Dark and Silver City project began some time between 2003 and 2007, according to numerous stakeholders and opposition party politicians.
The Free State premier’s spokesperson, Sello Dithebe, and department officials undertook to provide information on when the project began, how much had been spent and how many contractors had been paid to date. However, no comment had been received at the time of going to print.
The project was initially budgeted at R110m but by 2018 R260m had already been paid out. Last October, the department advertised a tender to appoint new contractors to complete the project to the value of R225m.
It has now appointed Rawcon to complete the construction in 12 months. The Sunday Times understands that various contractors were paid previously but abandoned the project. Community members have protested over the incomplete houses with some wanting to forcefully occupy the units.
Mangaung Ward 3 ANC councillor Tshepiso Machachamise said the project had been going for far too long. As a result, the buildings that had been completed had been vandalised and materials had been stolen.
“The project has stalled for a more than 10 years now and that has led to people stealing. Now there is an assessment of the damage that was caused to the completed units. They took cables, toilet infrastructure, cupboards and other material. We now have a steering committee and are confident that this time around it is going to be completed,” said Machachamise.
The development was supposed to cater for residents who earn between R1,622 and R7,500 a month. It was expected that rentals would start from R450 a month for a bachelor flat and go up to R2,250 for a three-bedroom flat. It was initially promised that the project would be complete by 2016.
“The most ironic thing is that there are multimillion-rand housing projects under the ANC-led government which are stagnant or abandoned by the ruling party and their contractors with no alternative on how to revamp those so that they can be turned into low-cost housing for our people,” said Rise Mzansi leader Songezo Zibi.
“Silver and Dark City represents many of the failures of the ANC. This project has been under construction since 2003. Years later people have nowhere to live and the construction is yet to be completed.”
DA’s premier candidate in the Free State, Roy Jankielsohn, said the project was a growing concern.
“After about R225m of expenditure, the project remains ongoing,” said Jankielsohn.
In 2018, former Free State premier Ace Magashule, during a visit to the area, blamed constructors for the delays.
In the past five financial years the department has forfeited more than R1bn in unspent funds to the National Treasury. The AG found it to have regressed with its qualified audits, found R2.9bn in irregular expenditure, R185.3m in fruitless and wasteful expenditure, and R5.3m in unauthorised expenditure.
Another housing project which took a long time to complete was in Matatiele in the Eastern Cape, where it took the government 10 years to build 40 of a planned 450 houses because the contractor was liquidated. This was after R110m had been paid since 2012 for construction.