Business

‘Lack of funding from China and SA halted BaicSA work’

2018-09-21 19:19

The work stoppage at the R11-billion Beijing Automobile International Corporation South Africa plant at Coega was due to insufficient funding by the Chinese and South African governments to pay contractors at the site.

“BaicSA gets the money to pay contractors from the two governments [China and South Africa]. It then gives money to the Beijing Industrial Design and Research Institute – the project implementors – so that they pay the contractors. This time insufficient funds were given to the research institute to pay contractors – that’s what caused this problem,” a source close to the project said this week.

The source was referring to major contractors stopping work at the BaicSA site near Port Elizabeth on August 31. They included Scribante, Ivor Smith Electrical and WBHO, which together were owed millions of rands.

The contractors returned to work this week.

Asked if the non-payment of contractors was because of budgetary constraints, the source said: “I can’t answer that. It’s a sensitive question”.

Baic SA is 65% owned by Chinese state-owned vehicle manufacturer Baic Group and 35% held by the South African state financier the Industrial Development Corporation.

However, BaicSA said the halt to work was due to payment procedures rather than fund shortages.

During a media briefing this week, BaicSA and the Industrial Development Corporation spokesperson Mandla Mpangase denied that funding was an issue.

“We got the funds to see this project completed. Otherwise we would not have embarked on it,” he said at the briefing, which was called by BaicSA and the Business Support Committee, a body for Nelson Mandela Bay small enterprises involved in the project.

Asked about the non-payment of contractors, Mpangase said: “It is not uncommon for such a huge project with so many contractors on site to experience late or delayed payment.

“After contractors submit their invoices for payment, these have to be verified and the work done inspected – that it is according to the contractual agreement. This cannot be done by the same contractor who has done the job, but by an independent engineer. This is what caused the payment delays,” said Mpangase.

However, a source indicated concern that the true picture of what was going on with the project was not being truthfully communicated to the public.

This came after conflicting versions of why the major contractors abandoned the site.

On another topic, the source said that there was a language problem at the BaicSA site.

“Despite the Chinese having been here for some time now, they cannot speak English and this hampers communication,” the source said.

The Business Support Committee, although happy that now contractors had been paid and were back at work, expressed grave concern about the non-payment of the principal contractors.

Some said their vehicles, which they used for business, had been repossessed by the banks because they could not pay loan instalments.

Baba Mingi, spokesperson for the Business Support Committee, said: “We are very concerned and hope that we won’t have a repeat of this.”

The committee said about 300 workers had been affected by the stoppage.

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May 31 2020