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Baic’s R11bn Coega project is bleeding millions

Oct 01 2017 06:00
Max Matavire

BaicSA vice president Zhang Liang opens the door of the SUV DX 25 with the steel frame structure of the assembly plant in the background.PHOTO:

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Johannesburg - A key contractor involved in Chinese car maker Baic’s R11 billion Coega project has appealed for no more disruptions, as it is already several months behind schedule.

The new vehicle plant is a joint venture between the Beijing Automotive International Corporation (Baic), which has a 65% stake, and the Industrial Development Corporation, which has 35%.

“We are bleeding. Work delays are costing us money,” George Gerber, managing director of Uhambiso Consult, which is overseeing construction, said this week.

“We don’t want any more work stoppages as the project is already five months behind schedule.”

He was speaking during a project status report back, which was followed by a tour of the assembly plant.

Only last week, a group of small, medium and micro enterprises (SMMEs) calling themselves the African Chamber of Business disrupted work for four days.

Gerber said that about 35% of the work had been dedicated to such enterprises.

A source with good knowledge of the project, but who declined to be named, told City Press that these delays cost the project R2 million a day.

The language barrier between Chinese workers and those employed by the local SMMEs had proved to be a problem.

This was evident during the media briefing, when Baic SA vice-president Zhang Liang’s speech had to be interpreted for the benefit of the journalists and invited guests.

Gerber conceded that language was a problem.

“We have engaged the services of various interpreters to improve communication. It’s still a challenge, but we are winning,” he said.

Baic this week called on black-owned small business enterprises in Nelson Mandela Bay to form partnerships to improve their chances of being awarded contracts in the project, at the Coega industrial development zone in Port Elizabeth.

“Instead of tendering as individual companies, they should team up so as to forge a formidable force and increase their chances of being awarded tenders in the various work streams. This will also limit the animosity that might creep in between them as they fight for the work,” Gerber said.

The project will be tackled in phases and is divided into six different contracts.

The first phase, valued at R800 million, will see the construction of a paint shop, a bridge, an office block and sewerage works.

During this phase, small businesses will be allocated contracts to the tune of R300 million.

Contracts will only be awarded to those SMMEs registered on the company database, which already contains 1 000.

Baic SA head of construction Sun Tong Li, speaking through an interpreter, said they intended to ensure work was distributed fairly and that local small businesses and communities got a share of the work.

“One of our cornerstones is the inclusion of communities of this region. Local black SMMEs must benefit from the project.

“Between 80% and 85% of the procurement value for civil works will be from South African companies and 15% to 30% of the procurement value for the vehicle assembly plant will be from South African suppliers,” he said.

Gerber said help desks had been established in townships such as Motherwell, KwaZakhele and Bethelsdorp to help local enterprises register on the database and to inform them how to go about tendering.

He said a committee of Baic SA officials was responsible for awarding tenders and that it would be done transparently.

“The opportunity for SMMEs is there, but unfortunately not everyone will get work,” he said.

Tong Li said they had not yet decided from which port to export the vehicles. Ngqura, 20km northeast of Port Elizabeth, was the logical choice, he said.

For skills development and training, they would work with local auto manufacturers like Volkswagen SA and Mercedes-Benz in East London.

The plant will make sports utility vehicles (SUVs), commercial and private vehicles.

On display during the tour were the D20, a hatchback which would be sold for between R150 000 and R200 000; and the DX25, a SUV costing between R210 000 and R250 000.

They are not yet on the market as they first have to be converted from left-hand drive to right-hand drive.

“Also we have to make sure the fuel specifications meet the South African requirements,” said Tong Li.

Gerber said until now, they had only one contractor on site. From next week however, they would have four, as the pace of work was increasing.

About 2 500 jobs are expected to be created during construction. A total of 50 000 units will be churned out per year during the first phase, increasing to 100 000 units per year when the plant is completed.

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coega  |  construction  |  car manufacturers

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