Namibian companies have criticised state-owned Namibia Water Corporation (NamWater) for requiring bidders for water infrastructure projects to have N$160 million in cash.
Now, the Construction Industry Federation (CIF) and the Namibia Local Business Association (Naloba) are asking the water company to cancel the N$2 billion tenders advertised last month.
Several Namibian contractors have criticised the water parastatal for the “restrictive” tender requirements. They say this would automatically rule them out of participating, even as subcontractors, in the company’s water infrastructure development drive.
NamWater chief executive officer Abraham Nehemia did not respond to questions sent to him on Wednesday.
Some contractors have accused the parastatal of making the selection and bid evaluation criteria inaccessible to Namibians and have pointed out at least three projects they believe are problematic.
The three projects are the Rundu water purification plant extension, Oshakati purification plant and the Ohangwena II Wellfield supply scheme.
“One can obviously see that they (NamWater) have the appetite to allow the participation of international companies only, because no African or local company can ever meet such requirements or criteria,” said a Namibian contractor, who declined to be named to speak freely to avoid victimisation.
Industry players said the three tenders have caused discomfort in the industry, as they are blocking local and African companies from participating due to their unwarranted qualification requirements.
The contractors mostly complained about the financial and experience requirements, as well as past projects completed.
While the tenders have not yet closed for bidding, the integrity of the process is already being questioned.
The Namibian has seen the evaluation and qualification criteria for the Oshakati Purification Plant.
On the financial requirements, NamWater is requesting that bidders show that they have cash, unencumbered real assets, lines of credit and other financial means (independent of any contractual advance payments) sufficient to meet the construction cash flow requirements estimated at US$9 million (N$160 million).
The Namibian understands that at least 21 companies attended the site meeting at Oshakati two weeks ago and only four are considered household major contractors in Namibia. Around 10 companies appear to be Chinese owned.
Contractors also blame their poor financial state on the government, which struggled to pay them on time, especially between 2015 and 2018. Many local contractors endured financial strain during this period, with some forced to cut jobs and close doors, as the government struggled to pay invoices.
CALL FOR CANCELLATION
CIF and Naloba have called for the cancellation of the tenders and that NamWater should review the financial and technical criteria, as well as change such requirements to realistic technical criteria to accommodate Namibian contractors.
“NamWater must relook at the requirements to allow for significant local participation in these projects,” said Naloba spokesperson Sakeus Namuhuja.
Namuhuja complained that the time given from the time the tenders were advertised to the submission date was also too short and made it difficult for Namibian companies to form joint ventures to be able to participate. He further said the current tender requirements will not benefit the Namibian economy, because the exclusion of Namibian contractors means that profits will be exported from the country. He said foreign companies also import labour, leaving very little benefit for Namibia.
“We are furious about this,” said Bärbel Kirchner, chief executive officer of CIF. She said the government is well aware that local contractors are effectively excluded from participation.
She added that the same situation previously happened with projects funded by international funding organisations, where tender requirements also locked Namibians out.
She listed the 2018 African Development Bank-funded project for the upgrade of the railway line between Walvis Bay and Kranzberg. Another project where Namibian companies were ignored was the KfW-funded road upgrade between Usakos and Karibib currently under construction.
“We have lobbied our government, we have written to our president and prime minister and senior Cabinet ministers; practically all key stakeholders. Yet, our government just goes ahead,” she said, adding that the situation will lead to the downfall of the country’s construction industry.
“Our contractors are persistently undermined and not optimally supported. Not only are the cash flow requirements very steep, but also the turnover requirements will automatically exclude locals.
According to the rules, bidders must demonstrate that they have had five years audited financial statements or balance sheets acceptable to NamWater, demonstrating a current sound financial position and indicating bidders’ long-term profitability.
Bidders are further required to have a minimum average annual construction turnover of US$38 million (N$740 million) calculated as total payments received for contracts in progress or completed within the last five years, divided by five years.
Bidders must also prove construction experience either as a prime contractor, sub-contractor or joint venture member or management contractor for the last 15 years, starting 1 January 2008.
They are also required to have been involved in the satisfactory completion of two similar projects between 1 January 2010 and the bid submission deadline date. The two contracts completed must each have been worth US$27 million (N$526 million).
The two contracts completed must have had a capacity of no less than 25 million litres of water.
Other requirements stipulate that bidders must not have a history of court or arbitral award decisions against the bidder since 1 January 2018.