Why the Chinese are winning tenders

Why the Chinese are winning tenders

MASERU – PUBLIC Works Minister Prince Maliehe says the government’s hands are tied when it comes to giving lucrative tenders to Chinese owned companies without going through tender processes. Maliehe told a press conference last week that in most cases the government is bound by agreements it signed with Chinese financiers.
Under the terms of the concessional loan agreements, the Chinese government insists that Lesotho source service providers from China.
A concessional or soft loan is a loan that you pay no interest or where a country pay a below-market rate of interest.

They are often given by multinational development banks, affiliates of the World Bank and government agencies to developing countries that would be unable to borrow at the market rate.
Soft loans on the other hand are loans that have lenient terms, such as extended grace periods in which only interest or service charges are due.
Soft loans typically offer longer amortisation schedules (in some cases up to 50 years) and lower interest rates than conventional bank loans, according to Investopedia.
Maliehe said Lesotho often finds itself accepting the conditions that are attached to the soft loans from China.

He however swiftly said the funders select contractors in China and therefore they are not bound by Lesotho’s procurement regulations.
Maliehe and his Principal Secretary Mothabathe Hlalele were trying to deal with a public relations backlash after local construction companies accused the two of dishing money-spinning jobs to Chinese companies.
The press conference also came a week after opposition parties claimed the Chinese had “captured the state”.
Hlalele however refuted allegations that they favoured Chinese-owned companies over Basotho companies.

“These accusations in the social media and elsewhere, in newspapers and radio stations are baseless,” Hlalele said.
“They say we only give jobs to foreign companies and I want to tell you that we do not,” he said.
“Our aim is to improve the lives of Basotho, how can we not give them jobs if we have any means to do that? Please do not be misled, we offer good jobs to Basotho because we want to reduce the rate of poverty in the country.”

Hlalele said the projects that his ministry is undertaking in the country “almost 99 percent of them are done by local companies”.
Maliehe singled out some projects that were done with the help of the Chinese, amongst many others that the government did with help from other funders.
He referred to the building of the new State House built at a cost of M190 million “and 100 Basotho had the opportunity to get employment out of that construction”.
“Besides that, we are still in the process of building a Stop Shop Vehicle Testing Station at Ha-Foso, which will help to make sure that cars are still in good condition for the safety of the people,” Maliehe said.

“The amount of M65 million is being budgeted for this project and at the end of this year the construction will come to an end,” he said.
Maliehe said the ministry is also in the process of designing the Maputsoe cross border station which will be opened in the new year.
“When constructing roads we also make trade easy between Lesotho and other countries nearby, while on the other hand government buildings help to bring services to the communities,” he said.
He also said the road between Tele and Alwynskop, a 10 kilometre bitumen road which cost M118 million has been built.

He said a Lesotho contractor, Matekane Group of Companies, was the one given the contract.
“Although we are trying by all means to do our work, but we still have some challenges such as lack of funds,” he said.
He also mentioned the controversial 62 kilometre long road from Marakabei and Monontša – which sparked much discontent from local companies after they learnt that it was given to ChinaGeo Company through selective tendering.

Some of the projects that were financed and done by the Chinese include a national network for telecommunications in which Lesotho used a US$60 million (about M828 million) concessional loan given by the Chinese to help Econet Telecom Lesotho.
The job was given to a Chinese company called Zhongxing Technologies (ZTE) and Econet Telecom Lesotho in 2010.

Other completed projects are the National Convention Centre, now the main venue for many international and regional conferences hosted by Lesotho, the Butha-Buthe Industrial Park, the National Library & Archives Building, the New Parliament Building Project and two secondary school projects in remote areas of Thaba-Tseka and Qacha’s Nek.
The Chinese have also built a new modern China-Lesotho friendship school at the top of Berea Plateau in Thuathe.

Projects that are in the pipeline include the Radio and Television Network Expansion Project and the construction of the Maseru District Hospital, which will replace Queen Elizabeth II Hospital, and the Eye Clinic Project.

There is also the Ha-Mpiti to Sehlabathebe road in Qacha’s Nek, Hlotse Multi-purpose Dam and Mafeteng’s 70 MW Solar Power Plant among others.
According to a paper titled Eastern Promises: New Data on Chinese Loans in Africa, between 2000 and 2007, concessional loans were always denominated in Chinese RMB, and required at least 50 percent of the goods and services procured under the loan to come from China.

Thooe Ramolibeli

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