AUSC preps to continue despite warnings-Phamotse

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Moorosi Tsiane | Ntsebeng Motsoeli

THE construction of sporting facilities for the 2020 Africa Union Sports Council (AUSC) Maseru Region 5 Youth Games will continue despite the Finance ministry’s warning that the project would leave the country in debt.

Gender and Youth, Sport and Recreation minister Mahali Phamotse this week told the national assembly that the games have already been launched and would take place from 1 to 14 December 2020.

Phamotse’s comments come despite a critical legal opinion from the Finance ministry warning that proceeding with the project would be tantamount to signing a blank cheque that would leave the country in serious debt.

The project is being financed through a M2, 450 billion loan from a firm called Property 2000.

The government will spend the M2, 450 billion on the construction of a 40 000-seater football stadium and a 3000-seater indoor arena. Part of the money be used to construct a new students’ residential unit that will accommodate 3000 people and will be used as a games’ village next year.

Phamotse was summoned to appear before parliament after officials from the Sports and Finance ministries had presented the legal opinion to the parliamentary Public Accounts Committee (PAC) on Tuesday.

The legal opinion said that the negotiations between the Sports ministry and various proposed developers were flawed and had procedural discrepancies that threatened the fiscal, legal and regulatory implications.

“We are informed that the infrastructure development of the projects was tendered through an expression of interest (EOI) which is irregular given the magnitude of the project,” reads the legal opinion.

“It is not clear why the procurement regulations for these transactions were not followed because it has resulted in the government affording potential developers to set terms and conditions as they deem fit.

“The EOI is meant to test the market and the alleged addendum to convert it into Request for Proposal is unheard of in supply chain practice. The government has issued carte blanche EOI to the market without necessary limitations…”

The opinion also says that the project was already eight months behind schedule and if it is forced to continue, the country risks getting sub-standard facilities.

“The entities are all eight months behind commencement of the works in terms of the timelines provided in their response to the EOI. It is not known to the Ministry of Finance how such a risk will be mitigated otherwise Lesotho risks sub-standard unsafe facilities…”

The opinion also adds that the projects would leave the country languishing in debt it is left to continue.

“The costing of the projects entirely depends on the developers’ estimates; therefore, the government remains vulnerable to over-costing of these projects without justification. There is a possibility of cost escalation due to unforeseen costs. The cash flow projections are not based on facts simply because the financial proposals attached are not financial models which cannot determine the viability of the project into 30 to 35 years proposed years (of repaying the loan).”

“The bankability of the projects cannot be determined hence no accredited financiers seem to be interested in these projects. Property 2000 was allegedly converted from close corporation into a company only last year. The fiscal implications including its solvency cannot be determined under the new regime it has opted for. In addition, it is not known whether indeed it is a trustworthy financier.

“The commercial viability is not known and will never be known without the feasibility; the government will just be signing a blank cheque and tying future generations to undesirable debt…”

However, Phamotse told parliament on Tuesday that the games would continue as several preliminary processes have already been done.

“The agreement to host the games comes with clear conditions…the local organising committee (LOC) is right on track working on seeing that we achieve that.

“We also have the theme of the games (Unite, rise and build), we have the logo, the theme song and a mascot for the games,” Phamotse said.

“The construction is in two categories. The first one is the construction of stadiums and grounds while the second is the building of the games’ village. The Prime Minister has already turned the sod for the 40 000-seater stadium, two Olympic standard swimming pools and a multi-purpose indoor facility in August 2019 at Lepereng while the Deputy Prime Minister also turned the sod for a 3000-capacity games’ village in Roma this month.

“To start the construction, the government through Ministry of Finance has signed an agreement with investors who will do the work,” Phamotse said.

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