Contract to deliver staff vehicles fails

A five-year contract awarded in 2015 for the purchase of subsidised vehicles for thousands of government employees has failed to deliver even 10% of the vehicles ordered in almost three years.

To date, a mere 283 of the 3,868 approved applicants have received their vehicles.

In October 2015, Mmela Financial Services was awarded a five-year contract by national Treasury to purchase subsidy vehicles on behalf of thousands of government employees.

National Treasury spokesman Jabulani Skhakhane said: “Since the commencement of the contract in October 2015, 3,868 applications were approved after going through the credit process check and 2,053 applications were submitted for ordering with manufacturers. Of the 2,053, only 1,314 vehicles were ordered as of 12 June 2018.

“Another 123 vehicles are at dealerships for collections and 283 were already delivered.”

Asked why it took so long to deliver vehicles, Skhakhane said Mmela was processing applications as received from the various departments, and government was monitoring the delivery of required vehicles according to orders placed.

“The payment to the supplier is strictly through the government payroll system, following the registration of the vehicle in the official’s name and only after the vehicle has been delivered.

“Government does not guarantee to supply a specific number of vehicles to be financed as the number of units may vary from year to year,” Skhakhane said.

According to officials within the department of transport who wished to remain anonymous, Mmela has been struggling to secure a financial backer for more than two years and only managed to secure one in March this year.

Mmela Financial Solutions’ Emmanuel Selwadi confirmed the company had only delivered 283 vehicles.

“The contract does not stipulate the minimum number of units to be supplied nor does it guarantee the number of vehicles to be financed. The three-month gap between the previous contract and the new award resulted in muted interest from financial institutions in view of the low embedded margins.

Selwadi said more than R101-million had been paid to vehicle manufacturers for purchasing vehicles.

“Over R600-million is earmarked for originating new assets. In return, government has made payments against R9.7-million in servicing the loan,” Selwadi said.

Asked why they had failed to supply subsidy vehicles in almost three years, Selwadi blamed the previous contract for the delay.

“We have fulfilled our mandate. What needs to be noted here is that previous contract structural glitches contributed to the contract not being run efficiently,” he said.

“Now that matters have been sorted out, we believe the contract will perform optimally.

“At present, just under 2,000 vehicles have been ordered from various manufacturers, 171 of which will be delivered over the next few weeks. We have communicated this to the State through its various forums.”

When asked about their financial status to deliver on the contract, Selwadi said: “Mmela has met and continues to interact with both local and international financial institutions. The start of the new RT 68 (Treasury agreement) in 2015 was deferred for nine months to about the third quarter of 2016 as government was installing its new IT system.

“This made potential international investors lose interest in the transaction which led to the cancellation of their mandate.”