R6bn border post upgrade project delayed, construction industry questions BMA’s reasons

The organised construction industry has expressed serious doubt about the reasons provided by the Border Management Agency (BMA) for the extension of the date for the submission of bids for a multi-billion-rand South African border posts redevelopment project.

Minister of Home Affairs Aaron Motsoaledi announced in June 2022 that his department would “in a few months’ time” issue a public request for proposals for a project to completely overhaul and rebuild South Africa’s six busiest border posts at a cost of more than R6 billion.

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In September 2023 he announced that the request for proposals had been published for interested parties to submit bids on a public-private partnership (PPP) arrangement for the redevelopment of the border posts.

Interested parties had to submit their bids by 4 March 2024.

However, the BMA reported on Monday that the date for the submission of bids to redevelop and redesign the six border posts had been extended until 4 July 2024.

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It said the extension followed requests from several potential bidders to extend the deadline.

Three reasons

It said these requests were received after potential bidders undertook organised site visits in October and November 2023 to assess the current state of the infrastructure and appreciate the complexity of the work at hand.

It said the extension requests were mainly premised on:

• The complexity and unique nature of the project;
• The time needed for the prospective bidders to raise funds to finance the project under the PPP arrangement; and
• The long holiday period between December 2023 and January 2024, which interrupted the consultative work of the potential bidders about the project.

“The primary rationale for this extension of time is to give an additional opportunity for the private sector to conduct broader consultations with each other and provide high-quality bids to the government,” it said.

Not really ‘so complex’

However, Roy Mnisi, executive director of Master Builders South Africa (MBSA), a leading building and construction national representative body, said on Monday the extension announcement is “very surprising”.

He said the nature of the work to be done is not so complex that the companies that are capable of carrying out those projects would need an extension.

“We have companies that can take on mega projects. Our belief is that it is unlikely that contractors would have asked for an extension,” he said.

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Mnisi believes what may have been an issue and led to the extension was “the planning within the department [Home Affairs] itself rather than contractors”.

“Contractors respond to the bids that are advertised and it’s highly unlikely they will be asking for a postponement. We don’t have that kind of thing,” he said.

Mnisi stressed that contractors need the work and MBSA members have always complained about tender cancellations and postponements and delays in either awarding projects or in ensuring the required licences and permits have been obtained for a particular project to start.

“We don’t have complaints about the time being short to tender and members needing to have more time,” he said.

“So I very much doubt the reason that has been given [for the extension] is actually correct. There is something that perhaps we are not being told.

“If we keep on postponing, cancelling or going back and forth [on projects], it just doesn’t work for the industry that is already ailing,” he said.

Not the first delay

This is not the first time there has been a tender delay in the border posts project.

Dirk Lourens, chief operating officer of JSE-listed construction group Raubex, said in November the six South African border post projects have been readvertised and submissions will close in early March 2024.

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“We believe that this time round these projects will go ahead. At this point in time, it’s early days and impossible to say what the value of these projects is going to be.

“But the makeup of the six projects is three bigger and three smaller projects and the indications are that one contractor will not get all of it,” he said.

“They will distribute it and spread the risk through [appointing] a few contractors to execute these projects.”

Lourens expressed optimism about Raubex securing some of the border upgrading project work.

Raubex recently completed a R2.5 billion engineering, procurement and construction (EPC) contract for the upgrading of the Beitbridge Border Post in Zimbabwe.

Project summary

Motsoaledi said in June 2022 that the planned border post upgrade project is related to the African Continental Free Trade Area (AfCFTA) agreement and is to ensure these border posts have appropriate infrastructure.

The six priority land ports of entry earmarked for redevelopment are:

• Beitbridge between South Africa and Zimbabwe.
• Lebombo between South Africa and Mozambique.
• Maseru Bridge between South Africa and Lesotho.
• Kopfontein between South Africa and Botswana.
• Ficksburg between South Africa and Lesotho.
• Oshoek between South Africa and Eswatini.

The BMA said on Monday the redevelopment of these designated ports of entry is one of the programmes the BMA and the Department of Home Affairs are pursuing on a PPP arrangement to improve the facilitation of people and goods across the ports.

It said the procurement process is therefore subject to the procedures set out in Treasury Regulation 16 for initiating, procuring and concluding PPP projects.

The BMA stressed that Treasury Regulation 16 specifically requires that a PPP project:

• Be demonstrably affordable;
• Result in value-for-money for government; and
• Transfer substantial technical, operation and financial risks to the private sector contracting party.

It said the project covers the full infrastructure development of each designated port of entry and the provision of required services to support the functioning of the BMA and its stakeholders.

The BMA added that construction will be undertaken in a phased approach to ensure that the ongoing operations at each of the designated ports of entry are not interrupted.

This article was republished from Moneyweb. Read the original here