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Call for Sanral to probe construction firms for price-fixing

Feb 06 2017 14:21
Lameez Omarjee

Johannesburg – There is a possible case of collusion by the local construction industry which has escalated the prices of the Gauteng Freeway Improvement Project (GFIP), according to the Organisation Undoing Tax Abuse (Outa).

Speaking at a press briefing on the excessive pricing of the GFIP, chairperson Wayne Duvenage explained that the South African National Roads Agency (Sanral) overpaid R10.8bn for the R17.9bn project.

The civil rights body will be writing letters to Transport Minister Dipuo Peters and Public Enterprises Minister Lynne Brown to launch a commission of inquiry into the excessive costs and to take action against collusive construction industry players.

READ: Sanral overpaid close to R10bn on Gauteng freeway upgrade – Outa

“We believe the construction industry is being protected, specifically if one looks at the recent agreement reached with the construction industry. We don't know why the in-depth investigation by the Construction Industry Development Board (CIDB) was halted. We have it on good authority that the CIDB was a long way down the road with it already,” said Duvenage.

“We want the commission of inquiry to happen to cover the extent of the collusion, the corruption or the ineptitude and overpayment of the project,” Duvenage said.

These costs have filtered into e-tolls, essentially making the public fund “corruption and maladministration”, he added.

Outa’s updated research, entitled, The Road to Excess: A Paper on High Pricing, Collusion and Capture of National Road Construction, incorporated international examples of road construction projects to benchmark local ones against them. Duvenage explained that benchmarking was necessary to ensure local industry is not “manipulating” demand and to keep local suppliers honest.

“I would be angry at the fact Sanral has not engaged with construction companies and engineers to ask why the rest of world builds roads much cheaper,” he said. “If they don’t want to comply and be collusive, then we should bring outside companies.”

Civil claims should be reopened against construction companies for colluding and adequate penalties should be applied. “We want oversight bodies to explain why they've been silent on this issue,” he added.

The civil rights body is also calling for the tenders of the upcoming N3 Cedara – Durban project to be fully investigated. An estimated R15bn is to be spent on this project, this is excessive, according to Outa.

The civil body also wants a transport regulator to be appointed to ensure there is no manipulation by the CBID and to keep state-owned enterprises (SOEs) honest, said Duvenage.

Government must appoint an oversight body to manage road construction pricing of tenders. Big capital intensive projects such as Medupi and the future nuclear build programme create room for money to be “hidden” and for “state capture” to take place because prices are inflated, he explained.

Outa is also requesting that if Sanral management is implicated, or has not acted in the best interests of the public, then e-tolls should be scrapped and corrective action be taken against them. “SOEs should be looking into the interests of the public,” he said.

Duvenage added that the new Sanral CEO, Skhumbuzo Macozoma has been “accommodating” and has engaged with Outa.  “It is not our intention to see Sanral fold. It is our intention to see Sanral run transparently and efficiently and professionally for and with the best interests of the public.” If the company adopts that as a central point to what it does, things will change, he added.

WATCH: Outa research shows Sanral overpaid on Gauteng freeway upgrade

Read Fin24's top stories trending on Twitter:

e-tolls  |  road  |  outa  |  construction  |  collusion  |  sanral
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