By Shinovene Immanuel | 22 May 2018
Nantong Sanjian is a locally based entity owned by Chinese firm China Nantong Sanjian Construction Group.
The agreement, signed on 6 April 2018 between the RCC and Nantong Sanjian, is currently part of an ongoing dispute, with finance minister Calle Schlettwein and works minister John Mutorwa saying the deal was irregular.
The RCC board, led by Fritz Jacobs, has, however, insisted that the agreement is legal, and that they followed procedures to rescue the failing parastatal.
The agreement reviewed by The Namibian shows that chief executive officer Seth Herunga represented the RCC, while Nantong Sanjian general manager Zije Ni signed on behalf of the Chinese company.
According to the agreement, the RCC partnered the Chinese company because it was looking for around N$580 million to save the parastatal from being shut down after the government said it would not bail it out.
According to the document, the purpose of the agreement was to facilitate and secure funding, as well as specify the terms and conditions that would determine the relationship between the parties regarding tenders.
“The RCC currently find themselves with projects with an approximate value of N$4,1 billion (current works),” the agreement said.
Current works are projects that the RCC is either working on, or plans to work on in future.
The RCCs current projects include the Uis-Khorixas-Kamanjab road (N$2,7 billion), Gobabis-Aminuis-Aranos road (N$630 million), the Swakopmund-Henties Bay-Uis road (N$750 million), the massive land servicing project at Goreangab in Windhoek (N$45 million) and a ministry of environment project (N$24 million).
As part of the agreement, Nantong Sanjian will give the RCC a N$580 million guarantee to implement its operational plans. The partnership will be over 14 years, and has a five-year repayment period at 15% interest per year.
The arrangement also states that Nantong Sanjian would become the RCCs major partner in the projects.
“The repayment by the RCC to Jiangsu Nantong Sanjian shall be executed in the form of participation to the maximum of 47%, and the RCC shall execute the 53% of its current and other identified future projects for five years or earlier,” the agreement said.
The 47% stake that will go to the Chinese firm is worth an estimated N$2 billion of the RCCs current projects worth a total of N$4,1 billion.
The N$2 billion could be higher since the agreement allows the Chinese company to participate in future projects within five years.
“[Nantong Sanjian] shall pay a refund of 10% of the funding amount to RCC for signing this agreement, following the filing of China State administration of foreign exchange regulations. Such amount shall be refundable by way of deduction from the full funding amount,” the agreement said.
The money will be paid through the Export-Import (Exim) Bank of China, a Chinese state-owned bank that has funded several projects in Namibia.
“The projects shall be executed in such a manner that profitability is achieved for each project so as to ensure fair and reasonable returns for Nantong Sanjian to recoup its funding,” the agreement said.
Nantong Sanjian would also provide the RCC with project management and control support for the state-owned entity on current and future projects during the time of the agreement.
The full amount of the funding arrangement would be released by next year March, the partnership document said, adding that “Nantong Sanjian shall ensure that it creates employment for Namibians for the majority of its work at all times throughout the duration and beyond the term of this agreement.
“Nantong Sanjian has agreed to assist the RCC with technical capacity building on all the current enlisted works, as well as identified future works on such terms as may be agreed between the parties to be secured within the duration of this agreement,” the document said.
The partnership document said the RCC can still get projects with companies other than Nantong Sanjian, as long as it does not trespass on their current deal.
The RCC promised to assist and facilitate administrative processes for Nantong Sanjian, such as getting work permits for Chinese nationals.
In case the RCC fails to get enough money from the projects during the repayment period, the parties could agree to extend the repayment period with a maximum two years, the document said.
RCC board chair Jacobs declined to comment in detail yesterday, but told The Namibian that “a lot of comments have been made recently by various people. I do not doubt that the facts will eventually be cleared”.
He said a legal opinion on the Chinese partnership showed that the agreement was “supported by relevant statutes, information and authority”.
ROCKY ROAD
The state-owned RCC hoped to boost its finances and survival chances by partnering with Chinese company Nantong Sanjian and avoid bankruptcy since the government had decided not to bail out the parastatal.
The RCC board partnered with the Chinese company after it was given the go-ahead by Cabinet last year to find a solution so that they could be self-sustaining.
The partnership has, however, not impressed finance minister Schlettwein, who asked the government to urgently seek a court order declaring the N$580 million agreement between the RCC and a Chinese entity as illegal.
He said some of the tenders the RCC added to the partnership were not budgeted for by the government. It appears the RCC board intentionally avoided consulting Schlettwein and public enterprises minister Leon Jooste because some directors suspected the two would block the transaction.
The future of the RCC remains uncertain, more than ever before, especially since the political head, works minister John Mutorwa, has decided to take a step back and watch Jooste take charge in determining the future of the RCC.
Mutorwa is one of the ministers who supported plans by Cabinet to close the RCC last year, and has not publicly supported the parastatal.
The contract between the RCC and Nantong Sanjian was referred to attorney general Albert Kawana for a legal opinion.
The agreement, however, allows room for termination which will be done by the International Chamber of Commerce in Windhoek.
Some RCC board members have insisted that the government should not shut down the parastatal because it works in a strategic sector where government spends billions of dollars on roads deals.
The RCCs critics, however, said the parastatal has over the years become too reliant on government bailouts, despite being spoonfed with some of the countrys biggest road contracts.
