Sanral provided misleading information about its ‘R53bn in tender awards’

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15-01-2025
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Moneyweb
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Confirms the total value came from the ‘award value’ of open tenders, requests for quotes, or procurement by other means.

The South African National Roads Agency (Sanral) published misleading information last month about awarding tenders worth R53 billion to date in its financial year.

Sanral CEO Reginald Demana said in a statement issued on 18 December 2024 that it had awarded R53 billion worth of tenders across the country since the start of the current financial year on 1 April 2024, and provided a breakdown of the tender awards made in its four regions plus its head office.

However, Sanral spokesperson Vusi Mona confirmed on Tuesday in response to a query by Moneyweb that:

“The total value of R53 billion comes from the award value of Sanral tenders, whether it is open tenders, request for quotes (RFQs), or procurement by other means.

“What you will find on the Sanral website are only open tender awards,” he said.

Open tenders and requests for quotes generally refer to tenders that have not yet been awarded.

R13bn, R15bn or R53bn?

Moneyweb’s query followed it being informed by analysts who attended a Sanral breakfast hosted by Absa Securities – about a week before Sanral issued the tender awards statement – where two senior Sanral executives apparently told the analysts that Sanral had in its financial year to date awarded tenders worth about R15 billion.

Absa Securities on Tuesday declined to comment on what information was disclosed at the breakfast, stressing that it was an internal meeting only for analysts.

Moneyweb’s query in December about Sanral’s statement on the tenders awards and details about the top 10 tenders awarded resulted in the roads agency stating: “All tenders awarded are published on the Sanral website.”

However, an analysis of the tenders awarded in Sanral’s financial year up to and including 18 December 2024 listed on its website suggested it had by that date only awarded tenders in that period to the total value of R13.6 billion and not R53 billion.

Moneyweb also asked Sanral to indicate the number and value of its tenders that had been adjudicated but not yet awarded.

Mona did not answer the question but responded by stating: “The total amount of Sanral tenders ‘that are planned for, and not necessarily awarded’, is R168 813 590 549.95.”

Tenders awarded

According to Sanral’s website, it has awarded several high-value tenders since its tender awards announcement, with the total value of tender awards in its current financial year up to Tuesday now at R26.3 billion.

These include:

• A R1.235 billion award on 7 January 2025 to Jodan Construction for the improvement of national road R516 section 1;
• A R3.3 billion award to WBHO Construction on 19 December 2024 for the improvement of national route N2 section 34;
• A R1.01 billion award to Concor Construction on 7 January 2025 for the improvement of national route 11 section 9;
• A R3.17 billion award to WBHO Construction on 6 January 2025 for the improvement of national route 2 section 34; and
• A R1.38 billion award to Concor Construction on 6 January 2025 for work on national road R101 section 8.

‘Major boost’ for road construction sector

When Sanral announced in December that it had awarded tenders to the value of R53 billion in its financial year to date, Demana said the latest update on tenders awarded was a major boost for the road construction industry.

“Sanral’s award of R53 billion worth of tenders since 1 April 2024 is an exceptional achievement, which is a testament to our commitment to ensuring that we continue to grow the road construction sector.

“Sanral’s injection of R53 billion into the construction industry will significantly contribute to the South African government’s efforts to grow the economy and create jobs,” he said.

“We are particularly pleased with this achievement given where we were last year this time.”

Demana explained that Sanral, in December 2023, was recovering from “a significant setback to our procurement processes in the 2023/24 financial year” because of legal challenges to the road agency’s preferential procurement policies (PPP), which halted all tenders.

Several tenders out

He added that several tenders are also currently out for various panels to procure infrastructure consulting engineering and routine road maintenance services.

In addition, Demana said Sanral recently advertised the construction tender for the Huguenot Tunnel in the Western Cape, the completion of which will significantly improve the current asset both in terms of mobility and road safety.

“We remain steadfast in our resolve to create developmental opportunities, contributing to inclusive growth,” said Demana.

“As we continue to grow our network, we will ensure our projects contribute meaningfully to job creation, community upliftment and the economic empowerment of South Africans.

“This [2024] has been a busy year, with significant progress made on financing, developing and maintaining the national road network.”

‘Sanral consistently not meeting own targets’

Peregrine Capital executive chair David Fraser said Sanral’s primary function is to issue, adjudicate, and award tenders and, after the tender award, monitor the progress of these contracts.

Fraser said Sanral has consistently not met its own targets as far as contract awards are concerned despite these contracts having the required funding.

He said the Sanral contracts have a very significant multiplier effect on the economy and, more importantly, create jobs, especially in rural regions where most of the roads are being constructed.

In addition, they stimulate several other supply-related industries, such as road materials, concrete products, cement and equipment vendors, he said.

Fraser said that although many construction workers are locally sourced, those who relocate are given subsistence allowances for accommodation and food, which again provides a positive stimulus to the regions where they work.

He added that after the recent announcement of the closing of ArcelorMittal Newcastle and the potential loss of 3 500 jobs, South Africa needs to do all it can to create employment opportunities for its people.

“This is why it is so important that Sanral sorts out its own internal bottlenecks and gets back to delivering again on its mandate,” he said.