Aveng Strabag JV terminates Mtentu contract, citing protests; Sanral unconvinced

06 February 2019

The Aveng Strabag joint venture (ASJV) has decided
to terminate the Mtentu bridge contract, in the Eastern Cape.

The 1.1 km, R1.65-billion bridge forms part of the
South African National Roads Agency Limited’s (Sanral’s) N2 Wild Coast road

Should it be completed, it will be one of the
longest main-span balanced cantilever bridges in the world, reaching heights of
around 220 m.

ASJV says it has been unable to work at the project
site since October 22, owing to continuing community unrest and protest action,
related to community demands on Sanral.

Sanral believes its engagement process with the
community has reached a stage where work can continue safely.  ASJV does
not, however, share Sanral’s view.

“The ability to execute works safely and in
accordance with international best practice is ASJV’s primary concern,” says
Aveng in a statement.

“Aveng and Strabag have come to the reasoned conclusion
that the ASJV cannot resume the execution of the works given the risk to the
safety and wellbeing of its personnel and has, therefore, elected to terminate
the Mtentu contract following consultation with external legal advice.”

Aveng says ASJV has provided two bonds
– contract securities – to Sanral in connection with the Mtentu contract.

These are a R245.1-million performance guarantee in
favour of Sanral, as well as an R81.7-million retention money guarantee, also
in favour of Sanral.
“In terms of the Mtentu contract Sanral’s rights to make a call against the
contract securities are strictly regulated and limited in terms of the Mtentu
contract itself,” notes Aveng.

“ASJV is taking steps to protect the position of
Aveng and Strabag in this regard.”

The termination will take effect on Wednesday.

Sanral “strongly rejects” the JV’s assertion that
the Mtentu Bridge site presented unsafe working conditions.

“[Sanral] has, as of today [Tuesday], issued a
notice of termination to the contractor for abandoning the site,” says the
agency in a statement.

“The South African government, both at national and
provincial level, has done all that was necessary to ensure that it was safe
for the contractor to return to site.

contractor is not being transparent about its true reasons for abandoning site,
but Sanral suspects that the publicly known financial challenges of Aveng may
have contributed to the decision.”

Sanral says it will do “everything in its power to
protect its interests”, adding that it will engage National Treasury to
determine the quickest way to resume construction of the bridge.

The Mtentu bridge contract uproar forms part of a
broader picture of community dissatisfaction with the scope and route of the
proposed N2 Wild Coast road project.

Wild Coast community body, Sustaining the Wild
Coast (SWC) said: “The proposed N2 toll road has never been in the best
interests of the Mpondo communities of the Eastern Cape”.

SWC notes that Sanral should withdraw from the N2
project and “consider more carefully what role government should play in
enabling sustainable development that will most benefit Eastern Cape citizens”.

“Any negative economic fallout of [the] withdrawal
from bridge construction must not be blamed on those who have been opposed to
the Wild Coast toll road, but rather on the failure of government to engage
meaningfully with the alternative routes proposed, and residents who will be
most affected by toll road construction.”

Sanral indicated in January, however, that much of the protests around the Mtentu bridge have been about the allocation and scarcity of jobs on the project, rather than the proposed routing of the highway.  Պ5��L

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