Neckartal Dam - New Bidder, Same Risks

In the latest chapter of the Neckartal dam saga, Italian construction firm Salini Costruttori has been selected as the preferred bidder. Construction of the US$308mn project has been long delayed due to previous allegations of preferential bidding and corruption surrounding the negotiations. At the centre of the controversy that caused the cancellation of the tender in 2012 was Italy's construction group Impregilo and China's Henan International Corporation. However, it now appears that the saga continues.

If Salini does end up winning (Salini reportedly came second to the Vinci- Orascom Construction Industries joint venture in the overall evaluation, yet came out on top due to its high technical score) little has in fact changed. Salini already owns 30% in Impregilo, secured control of the board in July 2012, and launched a EUR1.6bn take-over-bid of the group in February 2013. Hence, whether Impegilo or Salini gets the contract, the players involved will remain broadly the same.

Relative Outperformer
Construction Industry Value (US$bn), Real Growth (%)

The dam, if constructed, will be the largest one in Namibia, and following a year of controversy and speculation, a litmus test for the government. Namibia's construction industry is still performing relatively well with respect to its regional peers (most notably due to the investment interest circulating the Government's ambitious TIPEEG programme). However, considering that the majority of the secretaries reportedly investigated by the Anti-Corruption Commission in 2012 are still members of the tender board, we question the ability of the government to efficiently and successfully tender projects related to the programme.

This article is tagged to:
Sector: Infrastructure
Geography: Namibia

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