Future of R1.6bn bridge uncertain after contractor pulls out
06 February 2019 | Web Article Number: ME201913470
A row has erupted between the contactor tasked with building the Mtentu Bridge in the Eastern Cape and national roads agency SANRAL over the company’s decision this week to pull out of the R1.6-billion contract.
The Aveng-Strabag Joint Venture (ASJV), a partnership between Aveng and Strabag International was awarded the contract to build the Mtentu Bridge Project. On Monday it announced its intention to pull out pf the deal, citing safety concerns following violent protests against the project.
If completed, the landmark 1.1km main-span balanced cantilever bridge, will be one of the longest of its kind in the world. But the contractor’s decision to pull out of the project has thrown its future into doubt.
The ASJV said in a statement that it had been unable to do any work on the bridge since 22 October last year, “due to threats of violence and levels of community unrest and protest action related to demands made against SANRAL”.
SANRAL hit back on Tuesday, acknowledging that the demands of the community had yet to be fully resolved, but insisting that its engagement process had reached a stage where work could continue safely.
The ASJV disagreed. “The ability to execute works safely and in accordance with international best practice is ASJV's primary concern.
“Aveng and Strabag, on the strength of their combined local and international experience and track-record in complex bridge projects, 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.”
It added that it had taken the decision to terminate the contract after consultation with external legal advice.
The ASJV was also “taking steps to protect the position of Aveng and Strabag” over two bonds it had provided to SANRAL, a R245.1-million performance guarantee and an R81.7-million retention money guarantee.
“In terms of the Mtentu contract, although the contract securities are typically described as ‘on-demand’ bonds, SANRAL's rights to make a call against the contract securities are strictly regulated and limited in terms of the Mtentu contract itself,” the company said.
“The ASJV is mindful of the impact the termination of the contract may have and has made itself available for further discussions with SANRAL to work collaboratively to find pragmatic outcomes to the unwinding of the Mtentu contract.”
The roads agency responded by issuing a notice of termination to the contractor for “abandoning the site,” and releasing a statement saying it “strongly rejects” the JV’s assertion that the Mtentu Bridge site presented unsafe working conditions.
“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. SANRAL has been engaging with the contractor to return to site to resume work since the beginning of 2019.”
It also accused the ASJV of not being transparent about its true reasons for abandoning site. “SANRAL suspects that the publicly known financial challenges of Aveng may have contributed to the decision.”
It said Aveng was in the process of disposing of its loss-making construction business – Grinaker-LTA – which had been tasked with building the bridge.
The agency said it would do “everything in its power to protect its interests”. It would also engage National Treasury to find the quickest way to restart construction of the bridge.
SANRAL added that it would investigate the conduct of the contractor based on allegations made by the community.