Picture: SUPPLIED
Picture: SUPPLIED

Construction of the R11bn Beijing Automotive Industry Holding Company (BAIC) vehicle plant in the Coega special economic zone near Port Elizabeth has been delayed severely by local business interests scrambling for tenders.

Minutes from a stakeholder meeting in Port Elizabeth in late November showed how small, medium and micro enterprises (SMMEs) were unhappy about the way tenders were issued for up to 35% of work, which they said was supposed to go to them, causing multimillion-rand stoppages.

It is also apparent that critical funding for the BAIC SA project has not yet been released.

The Industrial Development Corporation (IDC) owns a 35% stake in the project, with China’s BAIC owning the rest.

Abel Malinga, the IDC’s divisional executive of mining and metals industries, failed to respond to queries late on Tuesday.

The stakeholder minutes showed that a representative of the IDC was told "he must watch his moves and do the right thing", as SMMEs threatened to shut down the site. There have also been reports of labour unrest and site closures by parties said to be related to small contractors. This means construction of the project, which aims to sell 50,000 cars a year into Southern African markets in its first phase, is five months behind schedule.

Yes, there are still problems, there was a tender advert in October … but no appointments has been made yet and we SMMEs felt that we are being sidelined
Thandazile Swaartbooi

Some SMMEs said they were not benefiting from millions of rand distributed by the Chinese car manufacturer.

The Beijing Industrial Designing & Researching Institute has been appointed as the engineering, procurement and construction contractor.

Small contractors allege tender documents created by BAIC did "not speak to us SMMEs" and were too large and complex. "Those [document] pages are too much for SMMEs and we’ve told them about it," Thandazile Swaartbooi, MD of Thandazile Trading, said on Monday.

"Yes, there are still problems, there was a tender advert in October … but no appointments has been made yet and we SMMEs felt that we are being sidelined," Swaartbooi said.

SMMEs have subsequently created their own steering committee to "help people to get tenders because they feel they are not well represented".

Another contractor, Kenneth Nzunzu of the Wells Estate Business Chamber, said that there was confusion about the project but that the appointment of SMMEs on a steering committee showed progress.

The Coega Development Corporation said parties to the project, including the IDC, appeared to be "acutely aware that the delays are affecting the project’s financial viability".

The institute "and its associates on the construction project had difficulties with compliant issues relating to local practices, procurement, labour recruitment and related regulatory matters such as work permits," said Gustav Meyer, Coega Development Corporation senior manager of business development for international markets for transport industries. Severe delays were expected.

The basic superstructure of the main buildings is being erected as part of the first phase of development worth R1.7bn. But only about R900m has been set aside to pay for structural steel from China, of which R300m worth of work has been set aside for local businesses.

"We are doing our best to catch up. I don’t know what the delay has cost us — a lot," said Zhang Liang, senior vice-president of BAIC’s international communications and foreign affairs division.

allixm@businesslive.co.za

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