Tenders for the construction of the R11 billion car plant at Coega’s special economic zone near Port Elizabeth went out earlier this month, five months behind schedule.
This comes amid numerous problems involving procurement and language differences that are said to be hindering communication between the parties.
The car plant is a joint initiative between China’s Beijing Automotive International Corporation (Baic), which is the majority shareholder with a 65% stake, and the Industrial Development Corporation (IDC), which owns 35%.
Black business forum the National African Federated Chamber of Commerce (Nafcoc) in Nelson Mandela Bay is accusing the Chinese partners of “arrogance, intolerance and domination”.
Nafcoc claims that Baic has sidelined and undermined its members, rendering them as “useless” and unworthy of being involved in the project.
The IDC confirmed that the project was facing challenges.
“This is typical of Chinese investors throughout the continent,” said Nafcoc president Lithemba Singaphi this week.
“They want to undermine Africans. This is not happening here only. Look what they did in Namibia. They [Baic officials] are arrogant and undermining.
"They don’t want to talk to us. They have openly said they do not report to anyone here, but directly to Beijing.
“They must know that this is a joint venture and locals have to play a part.”
Singaphi said even construction materials, especially steel – which should be sourced from South Africa – was being imported from China.
He said they were told by the main contractor, Beijing Industrial Designing and Researching Institute (BIDR), that local steel was of poor quality.
Presenting his annual report to Parliament last week, IDC CEO Geoffrey Qhena made reference to the Coega project, saying:
“We were not happy with all procurement issues. The project is proceeding now and the plant should be ready by June next year.”
Last year, when the project was launched, construction was expected to be completed by the first quarter of 2018.
IDC spokesperson Mandla Mpangase agreed with most of the issues raised by Nafcoc.
“The IDC has had several meetings with most, if not all, business formations in the Nelson Mandela Bay metro,” he said.
“The most recent one was on July 14, where project information was shared.
“However, there have been some challenges, largely because of language barriers with the engineering procurement contractor BIDR. The IDC is working on an approach to deal with these challenges.”
The tenders issued this week are for the construction of a paint shop, a bridge between the paint shop, an office block and sewerage treatment works.
Leon Bolton of Rousseau Probert Elliott, the project’s quantity surveyors, said the project was divided into six different contracts and that tenders for the three main contracts – which include the construction of the main plant – were not out yet.
“Tenders for these [the three main contracts] should be out by next month,” said Bolton.
Asked whether the delays to the joint venture would increase total project costs, he said:
“With the project five months behind, this delay may influence the cost ... We do not expect a big increase in costs.”
Mpangase confirmed that the construction steel was being sourced from South Korea, Spain and China.
“The closure of Evraz Highveld Steel and Vanadium, which manufactured structural steel for the construction industry – the only one of its kind in Africa – has had a negative impact on the local steel industry,” said Mpangase.
He said the steel structure represented 13% of the entire project.
Responding to allegations by Nafcoc that BIDR was not registered by the Construction Industry Development Board (CIDB) as a Grade 9 entity, and so did not qualify to conduct the work it was doing, Mpangase said:
“Some of the work packages are subdivided into several smaller work packages, which in turn get subcontracted to suitably qualified contractors in line with the appropriate CIDB grading.”
Singaphi said many wrong actions were taking place within the project and, despite Nafcoc having requested Small Business Development Minister Lindiwe Zulu to intervene, she had done nothing.
“We have phoned and written to the minister, but without success. We view this project as a catalyst to radical economic transformation,” he said.
Efforts by City Press to contact Zulu via email and telephone were futile.
The Coega Development Corporation’s spokesperson, Ayanda Vilakazi, said:
“Eleven local small, medium and micro enterprises have benefited from contracts worth R17.1 million that we awarded for bush clearance, site survey and clearance, and geotechnical investigations.
“The entire site is ready. We have done our part and it is now up to Baic to start construction.”
About 2 500 jobs are expected to be created during the construction phase of the vehicle plant.
SUBSCRIBE FOR FREE UPDATE: Get Fin24's top morning business news and opinions in your inbox.