Coega gets promise of tenants — at last

Posted On Sunday, 03 September 2006 02:00 Published by eProp Commercial Property News
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WILL THEY COME? A Coega interchange for traffic from expected tenants COEGA is beginning to shake off its woes with a number of new tenants committing billions to the controversial port development.

Property-Housing-ResidentialThis week Singapore-based chlorine manufacturer Straits confirmed it had raised its investment to R5.8-billion, with intentions to move on-site next year.

Coega spokesman Vuyelwa Qinga-Vika said: “Within the next few weeks we’ll be announcing five investors who have signed lease agreements with us totalling R300-million.”

The companies are involved in energy, automotive, chemicals, cement and food processing. Qinga-Vika said an estimated 1500 jobs would be created.

The change in fortunes couldn’t have come at a better time for Coega, the Eastern Cape’s first Industrial Development Zone in Port Elizabeth. Developed as an export node and funded largely by the Eastern Cape government, it has been dogged by criticism.

Coega’s masters were recently embarrassed by revelations at the Pillay Commission of Inquiry where auditors described how the bulk of the project’s capital investment had been written off because of sloppy management.

Bernard Levenstein, a project auditor, testified that R760-million was poured into Coega by the province, but following several write-offs, a direct benefit of only R160 was derived.

Levenstein said spending on projects at Coega included:
•R209-million to build the Neptune interchange and upgrade the N2 highway;
•R76-million developing a site for an aluminium smelter. But the company involved pulled out of the deal and Coega was left with egg on its face, having failed to secure a contract with a tenant before developing the site;

•R189-million for installing bulk electricity, the benefit of which fell to the Nelson Mandela Bay Municipality, which had the right to sell electricity to tenants;

•R108-million building a construction village to house workers. But with the absence of tenants the village remained empty. R51-million was impaired; and

•R107-million invested in training for staff at universities like Harvard and Oxford.
Levenstein said the impairments were mainly due to poor budget planning and reliance on verbal undertakings rather than signed contracts. He estimated that it would cost R3.2-billion by 2015 to complete Coega.

Last modified on Wednesday, 25 June 2014 17:28

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