KZN warns school builders it may struggle to pay

2015-01-14 17:31

KwaZulu-Natal’s department of education has run out of money to pay contractors building schools in the province – possibly until April.

City Press has obtained a letter that one of the department’s project managers, the Coega Development Corporation (CDC), sent to its own suppliers warning that projects could be delayed.

In its letter, dated December 8, the CDC asked its service providers that they carry their own costs, if possible, until the end of the financial year on March 31.

Alternatively, “in cases where work has to be suspended”, the CDC asked them to secure the building sites before stopping work.

The CDC also asked contractors to “open late” this year after the end of the annual builders’ holiday – which is this week.

No projects have been “scuppered” and no payments have been missed yet, CDC spokesperson Ayanda Vilakazi told City Press today.

The letter was just meant to “sensitise” suppliers to the possibility.

According to him, the department started raising the possibility of cash flow problems in November.

“The department has not mentioned which schools would be affected. Some will carry on and some may not,” Vilakazi said.

The CDC is now simply waiting on the department to tell them what is happening, he said.

“They are trying to source funds.”

In previous years the department also ran short of cash, but managed to secure more, he said.

The department has not yet responded to questions, but City Press will add its response when it does so.

The CDC is only one of KZN’s school building project managers and handles school contracts varying between R400?million and R700?million per year, said Vilakazi.

One recently appointed contractor is Gonal Construction in Newcastle which landed a R30.7?million contract from the CDC last year to build a new school in Umsilinga.

The company’s owner Nashalan Moodley told City Press he has been paid in full and is “fairly happy” with how government is handling problems.

His understanding of the KwaZulu-Natal department of education’s plan is that schools which are already under construction will be completed, but work on brand new ones might get postponed, Moodley said.

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