RCC in limbo

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Desie Heita
Windhoek

The Roads Contractor Company remains in limbo since the announcement to place the company under judicial management in September last year.
However, the Bill that should have started that process is yet to be tabled in the National Assembly. The Public Enterprises Ministry, which made the announcement last year, says it is the job of new Minister of Works and Transport, John Mutorwa, to table the Bill before Parliament.

Government has been paying the salaries of more than 400 workers at RCC since September with money coming from the government’s emergency fund. Provision for RCC salaries has only been made until the end of March 2018.

The fund has extended N$42 million since that time to service the RCC wage bill, according to the released spending document, which accompanied the 2018/19 budget documents. There is also an allocation of N$21 million reflected under the works ministry
as allocation to RCC. It is not yet clear when Mutorwa would table the motion.

Mutorwa is among the Cabinet ministers accompanying President Hage Geingob on a seven-day State visit to China, from March 26 to April 3.

Asked what the plans are for the salaries of RCC workers after March, the spokesperson for the Public Enterprises Ministry, Jonathan Swartz, said: “Treasury will have to take this decision in line with the budgetary provisions.”
However, Swartz was emphatic that there is no going back on the decision to place RCC under judicial management.
“The decision to approach the High Court to place the RCC under judicial management was a Cabinet decision and can only change if the decision is rescinded by Cabinet. This has not happened, and the decision still stands,” he said.

The move is expected to transform the loss-making RCC, into a new, similar but efficient entity. However, a motion must first be tabled in Parliament before the decision can take effect. After its tabling in Parliament, government would then have to approach the High Court for an application to have RCC placed under judicial management.

So far it appears that the works ministry, under Mutorwa, would spearhead this process. Last year, the Minister of Public Enterprises Leon Jooste was the one leading the process, with the then minister of works Alpheus !Naruseb not being in favour of the decision to wind up RCC, prior to the Cabinet decision to place it under judicial management. !Naruseb has now been reshuffled to the Cabinet portfolio of water and forestry.

Swartz said Mutorwa has to take the lead and table the Bill “since RCC currently falls under his legal authority”.
In legal terms, judicial management is applied to allow a company in dire financial straits, but which is still a viable business, the opportunity for rehabilitation and restoration to profitability. The judicial manager for RCC would be empowered to make far-reaching decisions on the company’s business transactions, to include operations, human resources and financial management.

Judicial is management’s main effect is to place a moratorium on debt payments. Another effect is that a manager is appointed who must oversee the business of the company. The judicial manager will pro-actively seek ways to restructure the debt of the company and respond to financial demands on the company.

It was previously understood that the plan is to birth a new RCC that operates as a commercial entity under the Ministry of Public Enterprises, and not the Ministry of Works and Transport as is currently the case. The public enterprises ministry would approve the strategic plan, sale of properties and oversee the business direction of the new RCC.

“We have some good mitigating plans,” Jooste said last year when he announced the rescue plan the ministry has for the company.

It is now not clear whether the new RCC would resort under the public enterprise ministry or would continue to resort under the current ministry. RCC has been registering losses since its establishment in 2000, and has posted financial losses with the value of RCC’s liabilities exceeding the value of its assets.

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