Another big splash for China in water contracts

 

This story is republished with permission from The Tender Bulletin

 

NamWater has awarded a tender for the construction of the Outapi water treatment works extension and upgrade to China Jiangxi International in joint venture with Homefin Properties for N$112-m, two months after the same partnership landed a N$91-m contract for the construction of Ondangwa – Oshali water pipeline.

The Outapi water treatment construction contract was awarded directly by NamWater in May, following the award in February of the Ondangwa – Oshali water pipeline construction project by the Central Procurement Board.

Since both projects are above NamWater’s N$30-m threshold for direct procurement, the non-involvement of the CPB in the Outapi water treatment tender indicates the water utility was granted an exemption from the finance ministry to administer it directly.

Tender W/ONB/NW-014/2024 for the construction of the Outapi water treatment works extension and upgrade closed 19-Mar-24 with five offers from N$122-m to N$162-m involving seven Chinese companies, as published in Bulletin 1540.

The tender was reserved for Namibian registered entities and advertised in The Namibian on 19-Jan-24 and listed in Bulletin 1524.

According to an executive summary notice posted on the water utility’s website, this tender was awarded on 15-May-24 to the China Jiangxi International / Homefin Properties joint venture for N$112,094,182.20 excluding VAT and contingencies. Their price at the bid opening was N$123,184,517.06.

The only other bidder not disqualified also included a Chinese contractor:

• Unik Construction Engineering Namibia / CK Heydt Civils JV = N$127,815,866.31.

All three the remaining non-compliant tenderers also all involved Chinese firms in joint venture with local contractors. Their VAT-exclusive prices in ascending order were:

• West Trading / New Era Investment / CCCC Origin Water Construction Group [not found on BIPA – no TAX, SSC nor AA] JV = N$121,787,819.44 – no clear detailed information given on various forms under Volume 1.2; did not submit any of the catalogues “nor did they indicate it anywhere else”;
• RK Investment / China Jiangsu International Economic & Technical Cooperation Group [no AA] / Tianjin Pipeline Engineering Group [not found on BIPA] – no TAX, SSC or AA JV = N$142,458,455.98 – historical contract non-performance not fully completed (bidder submitted an amended form different from the one issued in the bidding documents, where the section regarding pending litigation is removed); no information provided for various equipment such as chlorine dosing equipment;
• Adaptive Building Land Construction / China State Construction Engineering Corporation JV = N$162,380,664.10 – page 68 of BOQ not initialed.

 

Ondangwa – Oshali water pipeline

As reported in Bulletin 1537 (19 April – ‘China Jiangxi’s N$91-m splash’), the Central Procurement Board confirmed the award of the N$91-m contract for the Ondangwa – Oshali water pipeline to the same Chinese firm and its local partner after an order by the Review Panel to reconsider – but provided no explanation for the why the review was requested or the CPB’s decision to stick with its original decision.

The CPB confirmed its award of the contract for the Ondangwa – Omutsegwonime water pipeline replacement to China Jiangxi International / Homefin Properties joint venture for N$91,110,479.61 including VAT.

This Notice of Award dated 14-Feb-24 followed a reconsideration order by the Review Panel dated 08-Feb-24 after the initial award in Dec-23.

No further information could be found on the CPB website or under Review Panel decisions on the finance ministry’s website to clarify the Review Panel order.

The successful bidder announced in February was the same as stated in the earlier CPB award notice dated 21-Nov-23 – the China Jiangxi International / Homefin Properties JV (report in Bulletin 1522, 15-Dec-23).

Tender W/RB/CPBN-01/2023 for the construction of the Ondangwa – Omutsegwonime water pipeline replacement and ancillary works: Phase 1 (Ondangwa – Oshali section) was inexplicably issued under ‘Restricted Bidding’ and closed 15-Aug-23 with 13 offers from N$78-m to N$105-m, including five Chinese firms, as published in Bulletin 1520.

The CPB Procurement Management Unit had re-issued this tender on behalf of NamWater as ‘Restricted Bidding’ after the ‘Open Advertised Bidding’ tender W/OAB/CPBN-10/2022 closing 07-Feb-23 was cancelled by the CPB on 04-Jul-23.

Only 13 of the 18 tenderers from the ONB tender submitted offers in the second round.

In addition to the successful joint venture, only one other bidder was found to be responsive under the RB tender:

• Otesa Civil Engineering, Makalani Engineering & JNJ Trading JV = N$145,543,933.14 – ranked 2nd.

The reasons for rejecting the remaining bidders included not having signed certain pages or missing documents in their submissions, while the Zhong Mei & Luka joint venture was rejected because Zhong Mei’s NamRA good standing certificate had been revoked.

The eleven non-responsive bidders included four Chinese firms:

• Kunene River Construction & Electrical = N$78,110,420.61
• Zhong Mei / Luka JV = N$88,077,237.15
• Adaptive Building / China State Construction JV = N$91,002,612.85
• Onghushe Investment / Plumbco JV = N$95,072,559.22
• JDN Civil Engineering / New Era Investment JV = N$96,277,510.07
• West Trading / Unik Construction Engineering Namibia JV = N$96,407,279.84
• Palladium Civil Engineering / MES Investments t/a EMS Contractors JV = N$98,624,952.65
• FN Group of Companies = N$102,048,130.62
• Octagon Construction = N$102,876,057.73
• Namibia Welding Building & Civil Works = N$105,042,829.54
• CSV Construction Namibia / Water Engineering Africa JV = N$120,504,247.85.

Water tenders virtually an all-Chinese affair

The award of the Ondangwa – Oshali pipeline contract, which is financed by the Namibian government, follows the award in January by the African Development Bank of NamWater’s contract for the Rundu Water Purification Plant to China Civil Engineering for N$577.8-m, hot on the heels of the N$248.3-m Ohangwena Wellfield contract awarded to Unik Construction, while its contract for the Oshakati Water Treatment Plant has yet to be awarded but seems destined to go to another Chinese firm, although it has been reissued.

This would give Chinese contractors a full house on all three these water infrastructure tenders in northern Namibia, worth a combined N$1.485-b – all funded through a N$1.8-b AfDB loan to Namibia.

Stringent technical and financial criteria on these three water projects ruled out any participation by Namibian contractors on their own, sparking protests from the Construction Industries Federation who last year called for the cancellation of the tenders and their reissue in smaller lots (Bulletin 1523).

Bidders on the three AfDB-funded water tenders had to have average annual construction turnovers of at least US$38-m (N$740-m) over the past five years.

In addition, they had to prove construction experience the past fifteen years and must have been involved in the completion of two similar projects since the beginning of 2010 worth US$27-m (N$526-m) and with a combined capacity of at least 25 million litres.

 

The N$659-m Oshakati Purification Plant tender

Tender W/OIB/NW-003/2024 for the construction of the Oshakati Purification Plant was one of three construction tenders in northern Namibia funded by the AfDB’s loan for the Namibia Water Sector Support Program that closed at NamWater’s head office in Windhoek on 11-Sep-23. The AfDB’s cost estimate for this project is N$659-m and has not been publicly awarded and now been reissued.

The other two tenders – both awarded to Chinese contractors – are:

• W/OIB/NW-001/2024: Construction contract for the Rundu Purification Plant and associated infrastructure. AfDB’s cost estimate is N$790,021,164. VAT-exclusive prices for nine tenderers including eleven Chinese and two South African contractors were published in Bulletin 1510.
• W/OIB/NW-002/2024: Construction contract for the Ohangwena II Wellfield Water Supply Schemes (WSS). AfDB’s cost estimate is N$289-m. VAT-exclusive prices of nine tenders involving ten Chinese contractors were also published in Bulletin 1510.

Controversially, the award of the Oshakati purification plant tender has not been made public.

This is after The Namibian reported on 14-Feb-24 that NamWater had decided to award this tender above the N$659-m cost estimate to a Chinese company for N$935-m – N$447-m more expensive than one of the other bids.

According to documents reviewed by The Namibian, NamWater awarded this tender to Shaanxi Construction Engineering Group for N$936-m, although its bid was N$790-m.

According to the newspaper’s report, a letter to NamWater chief executive Abraham Nehemia dated 21 December 2023 from the AfDB shows that Shaanxi Construction Engineering Group was established in 1998 but did not list any projects prior to 2010.

“This is against the bank’s guidance as a request for such information will not change the substance of the bid, but this is to establish the qualification of the bidder. The bank insists that such information can be obtained to ascertain whether the bidder has such historical information. Requesting clarification on historical information does not change the substance of the bid,” the bank said in its letter.

Nehemia told The Namibian in response that all that had been done to date was a notification of the intention to award.

At that stage (14-Feb-24) the NamWater official said they were in a 10-day standstill period after which a public notification of the executive summary of evaluation report would be published (The Namibian 14-Feb-24).

At the time of going to print this week (11 July 2024), this public notification has still not been published – either by the AfDB or NamWater.

 

Other NamWater tender awards

In addition to the Outapi water treatment works and the Ondangwa – Oshali water pipeline construction tenders reported above, NamWater’s other most recent awards of domestically-financed projects (excluding the three AfDB N$1.8-b loan-funded projects in the north) include:

• W/ONB/NW-011/2024 for the construction of a new pipeline and appurtenances in Tsumkwe Settlement the construction of a new pipeline at Tsumkwe was awarded to Imperative Construction for N$4.4-m on 08-Mar-24, after closing 05-Dec-23 with no Chinese bidders (Bulletin 1538);
• W/ONB/NW-001/2023 for the removal of a roof structure, construction of on-grade concrete slabs and erection of new steel frame structures for the Oshakati and Oshakati – Ondangwa pump stations was awarded to James & Young for N$869,440 on 05-Dec-22 after closing 04-Oct-22 with no Chinese bidders (Bulletin 1475);
• W/ONB/NW-005/2023 for the construction of a new 200m3 elevated water reservoir at NamWater Station at “Goblenz” [Koblenz] was awarded to Shafa Trading for N$2.6-m on 15-Apr-23 after closing 17-Jan-23 with no Chinese bidders (Bulletin 1493);
• W/ONB/NW-009/2023 for the refurbishment of pedestrian and vehicle bridges as part of the Ogongo – Oshakati Canal Refurbishment Project (Part 1 & 2) was awarded to New Success Investment (Part 1) for N$1.725-m and NGC Investment (Part 2) for N$1.424-m on 17-Jul-23 after closing 16-May-23 with no Chinese bidders(Bulletin 1511);
• Restricted bidding tender W/RB/NW-002/2024 for the design, manufacture, supply, installation and commissioning of the Shamvura and Kayengona filtration plant in Kavango East was awarded to Aqua Services & Engineering for N$4.69-m on 28-Aug-23 – closing date not disclosed (Bulletin 1511);
• W/ONB/NW-005/2024 for the replacement of Collector 1 section – Schwarzekuppe – Swakopmund pipeline of Collector 2 was awarded to CK Heydt Civils / Unik Construction Engineering Namibia JV for N$59.6-m on 02-Aug-23 after closing 20-Jun-23 with 11 offers, including four Chinese contractors, with the only other responsive bidder being Zhong Mei Engineering Group / Luka Roads Rails Civils JV (Bulletin 1521);
• W/ONB/NW-006/2024 for the replacement of pipeline from Omdel to Henties Bay was awarded to Strydo Construction for N$15.317-m on 04-Oct-23 after closing 20-Jun-23 with no Chinese bidders (Bulletin 1521);
• W/ONB/NW-001/2024 for the construction of new pipelines and a 500m3 reservoir at Aroab was awarded to JDN Civil Engineering / Tiananmen Investment JV for N$11.162-m on 13-Oct-23 after closing 08-Aug-23 with no other Chinese bidders involved (Bulletin 1521).

It is noteworthy that these relatively smaller locally-funded contracts did not attract much interest from Chinese contractors.