DELAYED E2M PAYMENT COSTS GOVT E20M AFTER PENALTIES

MBABANE – The Ministry of Public Works and Transport has been warned against ‘bonsondo nzima’, after a E2 million charge from a property owner accumulated E20 million worth of penalties due to delayed payment.

Bonsondo nzima can be loosely translated to mean ‘heavyweights’. “Beware of bonsondo nzima (heavyweights) who want to enrich themselves through the ministry, because they will strategise on how to benefit from you owing them. They will think ‘if the ministry owes me E1 billion, this will gain interest overtime and they will find themselves paying me back E5 billion,” said Public Accounts Committee (PAC) Chairperson and Member of Parliament (MP) Musa Kunene, during the appearance of the ministry before the PAC. He further said such people had made a lot of money out of the ministry due to delayed payments.

Debt

“They will not even make the effort to follow-up on the debt and you will find yourselves paying more than is required. This is what upsets emaSwati, because at the end of the day you find that government has paid double, if not triple, the amount,” said Kunene. The ministry’s Principal Secretary (PS) Thulani Mkhaliphi, said their control over the cost was quite limited and although they had followed all the necessary procedures, the delay in payment resulted in penalties which multiplied the property cost. The Auditor General (AG), Timothy Matsebula, in his 2021 Finance Audit report found that the contractor, of the Manzini-Mbadlane road had failed to meet the project completion deadline stipulated  in the contract, and there were no written  justifications provided that were approved by the appropriate authority, which could necessitate the review of the programme and strategies to fast-track the project.
He reported that the controlling officer explained that the main delay on the project was due to lack of access on site caused by an issue with the property owner and incurred variations within the dictates of the contract.

“The issue involved a dispute on the compensation value for a property, which was affected by the project. The property owner got a court injunction to stop the works. This resulted in ‘a lack of access issue’ to the works as programmed. Accordingly, the dispute was referred to the Dispute Board for adjudication. the Dispute Board ruled that the contractor had indeed suffered delays due to the lack of access,” stated the controlling officer. He further reported that it transpired during the hearing that the property owner wanted E2 million for the property, but government only offered E900 000. The delays cost government E20 million in penalties.

Recommendation

The PAC, in its initial recommendation, said it was disappointing to note that government lost so much money due to failure to negotiate a price. The controlling officer was urged to conduct a cost-benefit analysis and weigh pros and cons before refusing to pay. Worth noting is that government has since paid the property owner. The PS said this issue was quite sensitive as most of the costs from the ministry came from delayed payments. The PS said the property owner was to receive compensation for the property which the Manzini-Mbadlane Road project was to pass through.  “It is a very unfortunate situation, where the ministry’s control was quite limited. This is because the company wanted the money found by an initial evaluation report and he insisted on the amount. The matter was further referred for adjudication; district adjudication to be exact and further proceeded to court. Unfortunately, the court awarded the company a high value closer to the E2 million, which showed that he was indeed right that this was the amount he had to be paid,” said the PS.

“The E20 million is costs of the delay in payment because the contractor did not have access. This project was not attended to by the engineers from the ministry but those from the contractor. They then calculated how much the delay would cost each day and the appropriate adjudication. What we can say chair, is that the ministry followed all procedure and the cost was beyond our control. We wish it could have been settled earlier,” he said. PAC Chairperson Gege Member of Parliament (MP) Musa Kunene questioned what the legal department had done to rectify the issue.

Dvokodvweni MP Mduduzi Magagula said the issue was with the evaluation process, he questioned what the ministry did to evaluate projects of this nature as they were costing the nation. Nhlambeni MP Manzi Zwane wondered what the ministry was doing to avoid a similar case in the future. He said right now it looked as though someone was being made to benefit intentionally. “As far as I see it, the ministry deliberately delayed the payment so that someone benefits from the interest accumulating,” said Zwane. The PS, Mkhaliphi, said all processes were done to the letter and everything was done lawfully, hence the delay.

Adjudication

“We had to follow the law in the negotiations. The E20 million accumulated because we followed all legal procedure, which includes adjudication and courts. Therefore, because the matter took a long time to conclude, the cost became higher than the initial charge,” said Mkhaliphi. He said government evaluators were professional and going forward, the negotiation process should be much broader and more transparent. The PAC chairperson said this was unfortunate and costing the taxpayer a lot of money. Lozitha MP Prince Mfanawenkhosi said the ministry should stop awarding contracts to companies without completing a thorough evaluation of the project. The PS, however, said what the Lozitha MP had stated was done by the ministry.

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