WINDHOEK- The finance ministry has during this financial year paid N$2.1 billion of accumulated invoices, including those arising from the slowdown on projects and penalties, Minister Calle Schlettwein said.

Schlettwein revealed this while responding to questions by leader of the official opposition Popular Democratic Movement (PDM) McHenry Venaani in parliament last week.

Venaani wanted to know, among others, how much money was paid in total, in penalties, to service providers whose projects and tenders were cancelled as part of government’s fiscal consolidation efforts necessitated by the current economic challenges facing the country. “The combination of budget over-commitments and rescheduling of project implementation contributed to the accumulation of unpaid invoices, in addition to those invoices which were not reported for budgeting purposes,” said Schlettwein.

He explained to lawmakers that most of the projects were rephrased and refinanced as a result of fiscal adjustments.
He said when fiscal consolidation was introduced in the 2015/16 financial year and reinforced 2016/17 financial year, projects with no tenders awards were postponed and such postponement did not carry financial but economic costs in terms of benefits foregone.

“For on-going projects, most of them were slowed, mainly because some such projects were not fully provided for in the budget,” he said. He said the cost of penalties arising from capital projects implementation arose as a result of several factors. “Some such cost arose as a result of rescheduling of project implementation,” he said, adding that others arose out of overpricing and project contract management issues. “Some such penalties and how they arose are still under investigation. The detailed breakdown of the penalties will be provided at later stage,” he promised.

The youthful opposition leader also wanted Schlettwein to explain how much money was paid in penalties to the mass housing project, oil storage facility project at Walvis Bay and other major developments. 

Responding to this, Schlettwein said government’s negotiating team reached consensus with 26 mass housing contractors whose initial claims amounted to N$628.6 million. He said the government negotiated a total reduction of the initial claim amounting to N$225 million. “This figure reduced the initial claim by 36 percent in favour of government,” he said.

According to him, the total settlement amounts from contractors totaled N$426 million and this mainly included claims for construction cost as well as additional claims for preliminaries and general costs attributed to standing time and interest on late payments.

Schlettwein said there were additional costs under the implementation of the fuel storage facilities.  However, he said most of the additional costs incurred were as result of exchange rate fluctuation. It has been previously reported in the media that the oil storage deal was negotiated in US dollars, landing government in financial troubles after the Namibian dollar became weaker against the American currency.

“It should be put on record that treasury has approved for this tender in Namibian Dollars,” he said, adding that, however, some public officials proceeded to include the US dollar component, which exposed the project to foreign exchange variation.

He said the matter, which has gotten the permanent secretary of the ministry of finance Erica Shafudah a written warning because of the manner the negotiations were conducted by technocrats like her, is still under investigation.