The suspension of the mass housing project has seemingly come back to haunt government and the National Housing Enterprise (NHE) after one of the contractors, Power-Oyeno, filed summons against the two parties for non-payment of over N$100 million owed to the company.
Urban and Rural Development Minister Sophia Shaningwa recently suspended the project, citing NHE’s failure to secure N$2 billion needed to fund the construction of houses under the first phase of the project.
Shaningwa, in her capacity as the line minister, is cited as second respondent in the matter, while NHE is listed as first respondent.
Power-Oyeno, owned in part by businessman Paulo Shipoke, was contracted to build 2 034 houses in Swakopmund in a deal worth N$796 million – one of the biggest tenders awarded under the mass housing scheme.
The contractor allegedly tried in vain to secure payment from NHE after several payment deadlines lapsed.
The exact amount owed to the company is N$101 999 513. Amid demands for payment and after Shaningwa suspended the mass housing scheme, NHE CEO Vinson Hailulu wrote a letter to Power-Oyeno dated June 3, 2015, in which he explained government’s decision.
“Please note that the NHE is just an implementing agency of the government for the MHDP (Mass Housing Development Programme), and thus the minister has the ultimate and final decision,” Hailulu, who is set to leave NHE in August, wrote.
Power-Oyeno contends that by suspending the mass housing programme, government was breaching the contract entered between NHE and contractors for the project.
The contractor asked the court to impose an annual 20 percent interest on the amount it is owed by NHE if the State-owned company continues to fail to honour its obligation towards the contractor.
The mass housing project, initiated by former president Hifikepunye Pohamba in late 2013, has been a subject of much controversy since its inception.
Issues have particularly revolved around funding, with NHE often saying that government, as the mother of the project, has shown little financial commitment towards its own baby.
The housing parastatal has been reluctant to dig into its own pockets to fund the mass housing project, saying the money it had is earmarked for executing its original mandate – that of providing affordable housing to Namibians.
Government, on the other hand, believes NHE, as its company established to lead the onslaught against the country’s housing crisis, should take the lead in securing funding for mass housing project, a plan that has proven futile thus far.