HARARE – The total cost of the construction of the Mbudzi Interchange in Harare, now renamed Trabablas Interchange, was $114 million – a 32 percent overrun on the initial budget of $88 million, finance minister Mthuli Ncube told the National Assembly on Wednesday.
The government raised the $88 million through a loan from Fossil Mines, a local company with links to business tycoon Kudakwashe Tagwirei.
Now Ncube has admitted that a further $26 million was sunk in the project from the IMF’s special drawing rights (SDR).
Responding to a question by Luveve MP Decent Bhajila, Ncube told MPs: “The cost of Trabablas Interchange was driven by our initial loan arrangement of the order of US$88 million, which was provided by the consortium of contractors.
“In terms of what we used from the Special Drawing Rights, we were required to pay a deposit of US$26 million. So, we used US$26 million from the SDRs to pay that deposit and then the rest was structured as a loan from that US$88 million arrangement.
“So, we blended both the SDRs and the loans from the contractors. I think it is fair to say that the product that you see at Trabablas is a world-class product. It is money well spent. It took time but here we are with a world-class piece of infrastructure. I think it would be advisable for this House to support the government to replicate this quality infrastructure in other parts of Harare where it is needed but also in other cities across the country.”
The revelation led to intense questioning from Citizens Coalition for Change MPs who said Ncube should have sought parliament’s condonation over the budget overrun.
Dangamvura-Chikanga MP Prosper Mutseyami demanded that Ncube should explain “what caused the additional US$26 million, bearing in mind that the US$88 million had been budgeted for to cover the whole construction of the interchange.“
Chinhoyi MP Leslie Mhangwa, an engineer, said the cost overrun could not be justified because all expenditure “should be part of the project at the planning stage.”
Ncube blamed the budget overrun on relocation costs for property owners who had to make way for the interchange.
“The cost of relocating, for example, relocating some of the residents that we relocated to create space, for developing this piece of infrastructure… There were some unexpected escalations of that cost, which then pushed us towards increasing the budget by another US$26 million that I have referred to. There are just unforeseen project variations. It happens in most projects. Projects do overrun. It is normal,” Ncube said.
Pressed by MPs how the budget was drawn and the project commenced without a clear picture of the relocation costs, Ncube maintained that “cost overruns are never planned up front, they occur during the implementation of a project.”
“That is when you discover that you have got cost overruns. However, you negotiate a movement of people, resettlement, relocation of families during the implementation of the project. You can never plan for those up front and say, well, it is all within budget. There will be budget overruns.”
Ncube said they spent “US$65 million on things such as contractors’ establishment on site, accommodation of traffic, the drains and just picking up a few things, pitching storm rate protection against erosion, stabilisation, prime court, road signs and foundation structures.”
He added: “So the hard infrastructure engineering part was $65.5 million.
“Then we had to add some bridges, which were needed. Things like bridge 1, bridge 2, up to bridge 12, that was another $16 million, for example.
“Then there was the supervisor engineering fees and electrical works. Supervisor fees alone were $2.4 million, electrical works $4.4 million, for example. If you just add those, then we are coming to $88.3 million.
“You can see that here we have not included the relocation costs that I was referring to. This $26 million went towards those relocation costs, relocating households who were in the way. That is what happens with projects. You have these unforeseen costs and you have to make provisions for them.”
Upon completion, the government renamed the interchange to Trabablas – President Emmerson Mnangagwa’s war nickname.
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