R3.7-billion highway upgrade in South Africa cancelled after 3 years

The South African National Roads Agency (Sanral) has cancelled a tender worth billions of rands more than three years after it was first issued.

The tender was intended for capacity improvements to the National Route 2 (N2) Section 25 from the Edwin Swales interchange to south of the EB Cloete interchange in KwaZulu-Natal (KZN).

It was opened to bidding in 2021 but was ultimately scrapped. The bids received went as high as R3.7 billion, however, the roads agency deemed the prices as no longer being “commercially viable.”

Plans up in smoke

The KZN tender was issued in January 2021 and managed to attract six bids, as reported by Moneyweb.

The applications were submitted by the following parties:

• Resilient Rock (Pty) Ltd – R1,937,147,260.54
• Thule Holdings/Mmakgoge Group Joint Venture – R2,348,524,229.18.
• Grinaker-LTA (Pty) Ltd – R2,572,937,822.42 to R2,638,910,587.10
• Concor-Vumani Edwin Swales Joint Venture – R2,985,845,404.83 to R2,993,754,156.78,
• Stefanutti-Stocks-Icon Edwin Swales Joint Venture – R3,175,302,755.72
• Hlanganani Joint Venture, comprising Raubex, WBHO, Motheo Construction and Enzon Construction – R3,727,819,952.09

Despite these bids, the tender was cancelled last month, with Sanral general manager of communications and marketing Vusi Mona stating that “due to changes in the market, the tendered prices are no longer commercially viable.”

There was a discrepancy with the tender report, as Mona claimed the agency received five bids when six were listed on Sanral’s website.

Resilient Rock was handed down two separate judgments by the Johannesburg High Court in 2023, which may explain the discrepancy as the company was placed in provisional liquidation in May 2023 when the first judgment was passed, while a winding-up order was issued for Resilient Rock in June of that year.

Given the sums being discussed in the tender, Sanral appointed a second service provider to conduct due diligence investigations, resulting in an extension to the adjudication process.

This led to all of the applicants extending their tender validity tests in accordance with the tender documents.

WBHO CEO Wolfgang Neff, who was part of the joint venture constituting the highest bid for the project, said that the tender was cancelled due to apparent irregularities, but that the nature of these irregularities was not revealed.

Sanral has not confirmed whether or not the KZN tender will be reissued.

This is far from the first time that Sanral has suddenly cancelled a tender, as the roads agency scrapped billions of rands worth of projects last year.

In October 2023, Sanral withdrew its Preferential Procurement Policy (PPP), which included a controversial tender scoring system that was first adopted in May 2023.

When the PPP was pulled, more than 80 tenders worth a combined R11 billion were cancelled only to be re-issued at a later date.

In another case, Sanral backed out of five major tenders in 2022 to the value of R17.4 billion, citing “material irregularities” as the reason for its decision.