Coega moves to take land

Posted On Thursday, 09 December 2004 02:00 Published by eProp Commercial Property News
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CDC moves to get land it failed to acquire on a willing-buyer, willing-seller basis.

Property-Housing-ResidentialLand expropriation, the phrase that causes tempers to rise in Southern Africa, will be an issue again as the Coega Development Corporation  (CDC) moves to get land it failed to acquire on a willing-buyer, willing-seller basis. 

CDC CEO Pepi Silinga says the corporation has been left with no choice but to seek expropriation of outstanding land designated for the Coega industrial development zone.

CDC has acquired about 90% of this land, save for 793 ha owned by two companies, Offit Enterprises and Coega Brickworks. 

Offit Enterprises runs a hotel on the land it owns. Coega Brickworks uses its land for manufacturing bricks. 

"This is a commercial transaction. I do not feel able to divulge any information," says Coega Brickworks MD Eric Offerman. 

Offit Enterprises could not be reached for comment. 

The valuation has been done and submissions are being handed to the authorities, says CDC marketing and communications manager Vuyelwa Qinga-Vika. 

She says no delays have been caused to the construction of the zone's basic infrastructure in the core development area.

She expects the expropriation process to be complete next year.  Price lies at the heart of the dispute that led CDC to consider expropriation.

The parties have declined to comment on the price issue, but it is safe to assume that CDC and the landowners have disagreed on what constitutes a fair and reasonable value for the land.

The court is brought in primarily to determine a fair and reasonable value. 

Mike Pinnock, a partner in charge of property matters at law firm Webber Wentzel Bowens, says such cases usually involve three questions. 

First comes a test of the validity of the expropriation. Here the court will consider the appropriateness of the expropriation and test whether it is in the public interest, says Pinnock. 

Second, the court will decide whether correct procedures were followed before the attempt at expropriation.

This requires the potential expropriator to have exhausted all possible avenues to execute a private transaction. 

Third, a fair and reasonable value comes under scrutiny. 

Coega, one of three industrial development zones in SA, was designed to lead the economic revival of the Eastern Cape.

Backed by a new deep-water harbour, Coega hopes to draw investment of R1 000bn in industrial activity in the next 30-40 years, says Silinga. 

Infrastructure layout to the value of about R7bn is nearing completion but the industrial development zone has yet to confirm a single tenant.

Coega's prospects looked bright with the confirmation about two years ago of a R12bn aluminium smelter led by French group Pechiney.

But the picture changed when Pechiney was taken over by Canadian group Alcan, which seems to be dragging its feet in committing to the smelter. 

Silinga says the smelter deal is expected to be finalised next year.

However, he says Coega's prospects are not entirely dependent on a single tenant, not even the smelter.

Coega is not a shopping centre and therefore not bound by the anchor-tenant principle, says Silinga.

Last modified on Thursday, 26 June 2014 14:53

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