Namibia overcharged by Chinese company

THE China National Machinery & Equipment Import and Export Company (CMEC) tried to charge Namibia nearly10 times the going rate for the installation of a railway line link to the Angolan border town of Oshikango.

Documents obtained by The Namibian show that CMEC offered to complete the link between Ondongwa and Oshikango (a distance of about 60 kilometers) for a whopping N$1,063 billion. In 2006, N$387 million was set aside for completing the Northern Railway Project as well as rebuilding the Aus-Lüderitz railway lines under the Medium Term Expenditure Framework (METF) budget. In late January, National Planning Commission Director General Helmut Angula announced that N$700 million of a N$1 billion concessional loan from China would be used for ‘social projects like the agricultural Green Scheme and to complete the remaining section of the northern railway’.Angula said the balance would be used for upgrading schools at Tsumkwe and Omuthiya but it now appears that the special USD$100 million ‘concessional loan’ facility, offered by China President Hu Jintao during his visit to Namibia early last year, would largely have to be spent on the railway project.In a memorandum written by acting railway director Robert Kalomho to his seniors on April 19, he pointed out that the Chinese offer was more than four times as much as an offer from a local company, partnering with Italian industrial giant Lucchini. While CMEC’s local representative, one of the local Chinese Embassy’s Economic Counsellors, had agreed to consider buying the rails from another supplier, their price for installation was not.The Chinese, documents showed, offered to supply rails for R290 million, but at a cost of R12 468 per meter for installation, the budgetary allocation of R300 million was evidently not enough, Works & Transport Permanent Secretary George Simaata noted in another letter to the Ministry of Finance.Making use of the concessional loan was therefore risky because of possible foreign exchange fluctuations, Simaata wrote. ‘Unfortunately, we are not aware of all the conditions attached to this loan money [in respect of] the interest rates, repayment conditions, loan duration, etc,’ he wrote.The Chinese wanted R290 million for the rails, and R773 million for the installation, documents showed. In comparison, the competitors had offered to do the same job for R250 million, Kalomho noted earlier.No comment from the Chinese Embassy was immediately available.Finance Permanent Secretary Calle Schlettwein however confirmed that Namibia had notified the Chinese government that the terms offered under the N$1 billion concessional loan facility were too financially onerous for Namibia.’We did not suspend any agreements, we just told them that the terms were too burdensome for our financial situation,’ Schelttwein said.