Western Cape Business News

Send  Share  RSS  Twitter  22 Feb 2012

EMPOWERMENT: Sekunjalo In The Dry Dock - For Now


Recent Western Cape Business News

CAPE TOWN empowerment company Sekunjalo Investment will be on tenter-hooks for the next six weeks while the awarding of a major government contract in the maritime sector is deliberated.

Late last year a consortium led by Sekunjalo secured a R1 billion five-year contract from the Department of Agriculture, Forestry and Fisheries.

The deal would have required the consortium - which includes Sekunjalo Industrial Holdings (a subsidiary of Sekunjalo which holds the major stake in Premier Fishing) and ship-building company KND - to conduct technical maintenance, infrastructure and personnel support to eight state-owned research and patrol vessels used for research, inspections of fishing trawlers and anti-poaching patrols.

The contract, however, is on ice after questions were raised around the tender process as well as over the potential conflict of interest that could arise because of Sekunjalo’s controlling shareholding in Premier Fishing.

There does seem to be some justification in raising questions around whether Sekunjalo could be both a ‘participant’ and a ‘protector’ in the marine sector – even though the company has offered assurances that working arrangements would separate the functions of commercial fishing and marine services to the state.

Current contract holders Smit-Amandla strenuously objected to the tender process and sought an interdict against awarding the five-year contract to Sekunjalo. The Democratic Alliance submitted an access to information application to access Sekunjalo tender documents.

The hold-up is a blow for Sekunjalo. Sekunjalo CEO Khalid Abdulla indicated the contract would significantly improve the group’s profitability and cash flow.

Abdulla says Sekunjalo Industrial Holdings is one of the only Black-owned companies on the continent with the requisite technical and engineering expertise to manage such a major maritime contract. “We not only manage technical maintenance of our own fleet, but we conduct maintenance and provide technical services to vessels from around the world.”

One of Sekunjalo’s big selling points in its tender was the willingness to outsource a material portion of the deal to smaller businesses. Abdullah says this is central to Sekunjalo’s business philosophy, which promotes job creation and the transfer of skills.

Come late March, and the picture around the R1 billion marine contract should hopefully be much clearer.

Although with the inevitable complexities that surround such large contract awards it might not be surprising to see the matters dragged past the due date.

This delayed scenario is certainly not one Sekunjalo – which could use the extra cash flow to expand its investment interests – would want to contemplate.

In the meantime, incumbents Smit Amandla are probably grateful for an effective extension on its ‘lost’ contract…


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