Government blows R35-million in R60-million agricultural project

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What was meant to be a R60-million state-sponsored cattle and sheep abattoir in Butterworth, Eastern Cape, is nothing but rubble after the government spent R35-million on a project that was cancelled four years after the expected completion date. 

Moreover, the government has been slapped with an order to pay the construction company hired for the build programme, Nebvest 46, more than R6-million for “wrongly” terminating the contract, as well as breaching its clauses. 

Residents of Butterworth, known as eGcuwa by locals, speak of a project that was meant to bring much-needed economic development to the impoverished area, but is now languishing as a “dump site” on the outskirts of the town.  

“That project is at a standstill; it failed at the foundation phase of its development. There is no hope that the project will be resuscitated again,” said one resident, who asked to remain anonymous. 

In July last year, Mail & Guardian reported that Butterworth had been deprived of ​​more than R11.4-million to upgrade an estimated 1 642 homes after R270-million went unspent by the Eastern Cape human settlements department. 

This left 39 220 families living in dilapidated corrugated iron homes when there was a budget for their upliftment. 

In June 2016, the agriculture, land reform and rural development department entered into a contract with Nebvest 46 to build the Mnqumashe High Throughput Cattle and Sheep Abattoir in Butterworth for a contract price of R60-million. 

The initial deadline for completion of the project was September 2017, but the contract was extended to May 2018 following delays. 

This is according to an adjudication award given to Nebvest 46, where the adjudicator, Alastair Hay, stated that the national government’s assertions that the delays were caused by the contractor did “not appear to be credible”. 

“The contractor’s version that the delays were attributable to the employer (the government) and connected with delays in payment, the suspension of work by the professional team due to non-payment, environmental authorisations not being in place and the many other causes adverted to in the claimant’s (Nebvest) so-called extension of time claim … persuades me that the culprit in so far as delays to the execution of the contract are concerned was predominantly if not entirely the employer,” reads Hay’s adjudication, which is dated 26 May 2022. 

“More so as there is no evidence of any notices of delay having been issued to the contractor by the principal agent or the employer.”

Hay added that the project “stuttered along” until it was eventually cancelled by the agricultural department in February 2020, which, the adjudicator added, breached clause 39.2 of the contract. 

“In terms of the clause, the employer is obliged to pay the contractor its damages and/or loss of profit calculated as the lesser of an amount not exceeding 10% of the contract sum; or 10% of the value of incomplete work,” Hay wrote.

“Clause 39.2 also states that, save for the above compensation, the contractor is not entitled to claim any other amounts whatsoever in respect of such termination or cancellation of the agreement.”

Hay said the responsibility was on the agricultural department to prove that it was entitled to impose penalties to Nebvest 46 for the delays, calling it “insufficient” for the department to “contend that all delays post May 2018 are the responsibility of the contractor”. 

“If the delays post May 2018 are attributable to the acts or omissions of the employer or its agents, which on the evidence available is taken to be the case, the employer is not entitled to penalties irrespective of whether the contractor claimed and was granted an extension of time. 

“This is in accordance with the principles that a party may not benefit from its own wrong.” The department of agriculture, land reform and rural development as well as Nebvest 46 had not commented by the time of writing.