PARLIAMENT, February 13 (ANA) – Government on Monday released details of its agreement with construction companies to promote transformation in the sector, saying black owned firms and equity owners could see turnover totalling between R21 billion and R27 bln annually over the next seven years.
The agreement which was entered into following the companies being fined R1.4 bln for collusion, would see the companies pay an additional R1.5 bln over the next 12 years towards development projects in the industry.
“The companies have paid their first tranche of R117 million rand to the national revenue fund. The next tranche is due in July 2017,” said Economic Development Minister Ebrahim Patel.
The companies, Murray and Roberts, Aveng, WBHO, Stefanutti Stocks, Raubex, Group 5 and Basil Read, have also committed to increasing black ownership and paricipation in the industry.
Murray and Roberts sold 100 percent of its construction and infrastructure company to the Southern Palace Group, a black-owned consortium. “Murray and Roberts will remain in other infrastructure sectors such as oil and gas, metals and minerals and power and water sectors,” said Patel.
Aveng has also opted to sell equity. The company is selling 51 percent equity in Aveng Grinaker-LTA to black investors and black-owned construction companies.
WBHO have identified three partners to reach 25 percent of its turnover in construction and civil engineering in seven years. The companies are Fikile Construction, Motheo Construction, a black women-owned company and Edwin Construction.
In a simililar deal, Stefanutti Stocks will partner with two companies – TN Molefe Construction and Axsys Projects – and will also aim for these entities to reach 25 percent of its turnover in seven years.
Raubex is still talking to emerging black-owned companies and would announce its partners soon, while Group 5 and Basil Read have asked for a few months to decide on whether they will sell equity or partner with emerging companies.
“Based on current turnover and profit levels in the sector, it is projected that by the end of the several years, black firms and equity owners…would have a combined turnover of between R21 bln and R27 bln and over the seven years as a whole through the phased-in arrangements, have a cumulative turnover estimated to range between R104 bln and R123 bln,” said Patel.
Annual profits are estimated between R600 mln and R770 mln yearly, and cumulatively at between R3 bln and R3.6 bln.
The seven construction firms were also required to sign integrity commitments, entailing the company and its employees are not invovled in bribery, corruption or collusion, among others.
– African News Agency (ANA)
