R100-million to fix tender road to ruin
Four years after a R100-million provincial government contract crashed in the Free State – driving a large civil engineering company into bankruptcy and rendering a major road impassable –the province has finally taken action to repair the disaster.
A tender to “rehabilitate and reconstruct” the R74 highway between Harrismith and Oliviershoek went out on October 10. The R74 is the official alternative route for the N3, and the gateway to the northern Drakensberg.
In 2010, a few months into an earlier rehabilitation contract, the Free State roads department ran out of money. The 24km stretch of highway then degenerated into a pothole-riddled, largely one-track gravel road.
The main contractor, Sanyati Civil Engineering and Construction, went under when it was not paid for work worth R40-million.
The local hospitality industry was also affected, and two well-known resorts were forced to close.
The province later paid Sanyati’s liquidators R25-million in a court settlement.
Company documents seen by amaBhungane hint that factional battles within the ANC government may have underpinned the province’s failure to pay.
Province mum on project funds
Free State Finance department spokesperson Pule Motsoetla would not say how much has been earmarked for the new project, but he gave an assurance that there would be sufficient funds.
When amaBhungane visited the road last month, bright yellow and black signs warned of potholes. Despite a cautionary sign recommending a speed of 40km/h, a speed of 15-20km/h turned out to be more feasible. The 24km took a stressful 30 minutes to complete.
In 2009 the road was included in a R4.2-billion programme to rehabilitate 23 roads in the Free State.
But a News24 report alleged that this happened without the final approval of Seiso Mohai, the Free State MEC for finance at the time.
Later, the 11 projects, including the R74, were put on hold because the department had overspent its budget.
The saga began in 2010 when Sanyati was awarded a R104-million, two-year tender to upgrade the road.
A former Sanyati staffer, who asked not to be named, said that in terms of the turnkey project “we had to start work immediately, pay for the work ourselves, then claim back from the government”.
But when the first payment of R15.6-million was due at the end of March 2011, the department announced that it had run out of funds.
Faction battles affect finances
Company documents seen by amaBhungane include exchanges between Sanyati’s lawyers and the province, suggesting that the funding crisis could have stemmed from a battle between factions in the department, one of which oversaw the finances and the other the issuing of tenders.
In 2011 the national treasury placed the Free State roads department under administration for three years, during the time Sanyati had an outstanding claim of R43-million.
The only payment the company received was R14-million in late 2011.
It went into liquidation in July 2012, and its listed parent company, Sanyati Holdings, followed a year later.
Said the Senyati staffer: “The government has basically lost all of the R25-million it paid the liquidators. Now it will cost it another R100-million to fix the damage.”
Residents interviewed by amaBhungane pointed to the road as a major factor in a sudden slump in the local economy.
Landmark guest resorts Little Switzerland and Caterpillar Catfish were forced to close after a tourism decline, with a loss of more than 200 jobs.
Charles Preece, of the Federated Hospitality Association of Southern Africa (Fedhasa), said the condition of the road has had a negative impact on the northern Drakensberg.
“Occupancy levels have been critically damaged; businesses and hotels have closed. For years we got excited to hear that the road was to be included in the budget, but it didn’t happen,” he said.
Preece said Fedhasa had written several times to both the Free State and the KwaZulu-Natal government in a bid to speed up work on the road.
Hilton Bedingham, the owner of the Cavern resort near Bergville in KwaZulu-Natal, said he had been fighting with the provincial government for the past five years over the state of the R74.
He said the alternative route took an extra hour and involved a R60 toll fee.
A farmer and guesthouse owner, who asked not to be named, told amaBhungane he had stopped warning tourists about the road for fear of losing business.
“It’s better not to say anything. If tourists see there’s a problem they won’t book with us, so we market it as a true African experience,” he said.
“We also stopped making a big thing about it in the media. If there’s nothing on the table to fix it, why bother?” he said.
Rozelle Hattingh, owner of the Tweevlei guest farm, described transporting her child to day care in town each day as “a nightmare”.
“Every month there’s a tyre gone – or the shocks – and every year it gets worse. My main concern is safety because most people don’t know which side of the road to drive on,” Hattingh said.
Hillary Mophete, roads department spokesperson, said a compulsory meeting was held with bidders on October 17 to discuss details of the contract.
She said the department had recently been audited, allowing it to put out a new tender. “We used to run out of money often because the department has to do a lot. We’ve made so much progress since then.”
The contractor was expected to start on site in January next year and complete the work by 2017.
Mophete also said “disciplinary steps” had been taken against officials implicated in the tender meltdown, but would give no further details.
However, the Democratic Alliance’s Leona Kleynhans – a member of the Free State legislature’s roads committee – said she was unaware of any disciplinary repercussions.
She added that, until recently, nothing had been done to improve the road.
“We filed numerous questions in the legislature and Parliament after MEC Butana Khompela said the road was the responsibility of Sanral. This is not true – the road is still under the Free State’s responsibility.”
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The M&G Centre for Investigative Journalism (amaBhungane) produced this story. All views are ours. See www.amabhungane.co.za for our stories, activities and funding sources.