LOCAL contractors have been handed a massive boost after the government resolved to award all construction tenders worth M10 million or less to local companies whose majority shareholders are indigenous Basotho.
The government has also resolved that all tenders worth M20 million or more will now be awarded to a consortium of at least two companies rather than a single company.
The latest government resolutions were communicated by the principal secretary in the Ministry of Public Works, Mothabathe Hlalele, to all principal secretaries on 13 November 2018.
Mr Hlalele communicated the directives in a savingram titled ‘Procurement of Contractors for the Construction of Government Building Projects’.
“This savingram serves to inform all addresses that due to our economic situation and as a result of promoting and empowering smaller construction companies, the Ministry of Public Works and Transport has resolved that:
“All building construction works valued at over M20 million will no longer be awarded to individual companies but will be tendered to individual consortium of two to three depending on the magnitude of the project.
“All building works to the value of M10 million downwards will be reserved for local Basotho companies.”
Mr Hlalele refused to say whether or not the latest government’s decisions were in response to complaints by local contractors who allege that the government is biased in favour of Chinese companies in the award of tenders. Mr Hlalele said the measures were borne out of the need to ensure that more companies benefitted from government tenders and grew instead of distributing the tenders among a few companies.
“The savingram is authentic. It must be appreciated that our economy is so weak because only certain individuals are getting richer while others are not moving from where they were when they first ventured into business. There are also certain companies that outcompete others and for this to stop, we decided to create a business environment which is conducive enough for competition.
“Small companies must also grow in order to compete with other companies. We want to promote local construction companies because when they are at par with others, the competition will be so healthy that every company stands to win big construction tenders. We want to move away from the current status quo where only a selected few know that they will be awarded big tenders,” Mr Hlalele said.
He said companies should provide documentation which clearly proves that the majority shareholding is in the hands of indigenous Basotho.
He said that the new regulations would not affect companies that had already tendered for work prior to 13 November when the regulations came into effect.
“We will ensure that this policy is followed and sticking by this policy will ensure that come 2020, most of the local companies will have grown big enough to compete with any company in the construction industry. On top of that, wealth would have been distributed equally among our people and we would have closed a huge gap between the rich and the poor,” Mr Hlalele said.
Six months ago, local contractors ganged up to fight what they describe as the “glaring bias” which has seen major government construction tenders being awarded to Chinese companies.
Two major local companies, Sigma Construction and LSP Construction penned a joint letter to the Public Accounts Committee chairperson, Selibe Mochoboroane, on 7 June registering their “serious concerns about the vast majority of construction projects being awarded to Chinese contractors”.
The two companies alleged that Chinese companies were being unfairly and unprocedurally awarded tenders even in instances where local companies had demonstrated that they were better placed to undertake the work.
Sigma Construction and LSP Construction are not the only local companies who are up in arms with the government over the award of tenders to Chinese companies.
On that same day that they wrote to Mr Mochoboroane, the Consortium of Lesotho Contractors (CLC), an association of 32 Basotho-owned contractors also penned a similar letter to Mr Mochoboroane.
“I write to draw your attention Mr Chairman (Mochoboroane) and members of your (PAC) committee to an emergent practice whereby, consistently, a certain category of foreign construction companies, (sic) of common nationality are awarded construction projects to what has now progressively become the exclusion of Basotho companies and indeed also other companies falling outside of that seemingly select group,” wrote Mokhele Likate on behalf of the CLC board of directors.
“The disproportionate award (of tenders) …seems to compromise the core values of integrity, transparency, fairness, accountability, service ethics, empowering of local employees and stakeholders.
“The thriving trend of awarding construction projects to non-local companies can only but cripple the ailing economy of the country and add to Basotho’s misery of poverty and unemployment.
“This has to be discouraged by all means and we believe that your good office (PAC) can play a big role in significantly reducing this practice and paving the way for corrective measures to be implemented.”
Mr Mochoboroane acknowledged receipt of the letters and said even though the PAC was still to meet over the issue, there was merit in the local contractors’ grievances.