World Bank asks road contractors to form joint venture
The World Bank has asked that local road contractors in Samoa form a joint venture, in order for them to be eligible to bid and participate in its multi-million tala road extension project from Vaitele to Faleolo.
The response from the World Bank follows a request from the Government to the donor, to lower its requirements for the roadworks contracts, in order to allow local contractors to share the workload and profit from the project.
In an interview with the Samoa Observer, Minister of Works Transport and Infrastructure, Papali’i Niko Lee Hang said the option given by the World Bank is for the road contractors to go into partnerships.
“Right now there are conditions from World Bank that is difficult for our contractors to meet and only the overseas companies can, which denies our the locals that opportunity to bid,” said Papali’i.
“That is why they have asked for our contractors to form a joint venture, so they can achieve the requirements because we only have one local company that can achieve the requirements.
“Unless they go into joint venture to put together all their resources then World Bank can accept it, otherwise big projects can only be rewarded to overseas companies and it is a disadvantage for our contractors.”
The other condition of the joint venture is that the Land and Transport Authority (LTA) will have to make an assessment on the companies and report back to World Bank.
Papali’i explained the agreement with World Bank is for L.T.A. to conduct an assessment on the joint venture, and if they agree to a recommended partnership they will provide a letter of no objection and works can then commence.
“World Bank will require all these details regarding to references about the contractors,” he said.
“If they are okay with them (joint venture) then they will provide us with the letter of no objection.”
However, the Minister indicated that the joint venture option was implemented in the past and did not succeed.
“It rarely works. There are usually disagreements between contractors that if one sees the other one contributing more they will want more (money) and it will cause more delays.
“But that is the only way to get the job done. We have accepted that is the only way to choose our local contractors otherwise they will not be able to get that job under World Bank conditions otherwise it will be outsourced," he added.
Papali’i pointed out once the projects are given to overseas companies, the money flow will leave the country and local contractors will not be given the benefit of being part of such big projects.
He said the only benefit to Samoa would be labour workers who will be employed by the overseas contractors temporarily when works get underway.
At the moment, the only local contractor that meets requirements from the World Bank is Ott Construction, which has been awarded the roadworks from Afega to Malua.
The work on the Vaitele to Afega portion of the road has not resumed, pending discussions on potential joint venture partnerships between the local contractors, in order to bid for that part of the project.