The Housing Authority (HA) is to borrow $70 million under the Chinese ‘soft’ loan scheme to fund its low cost housing project.
The financing arrangement is reported to be in its final stages of negotiation.
Some serious questions of accountability and transparency associated with this loan arise as more information comes to hand.
It is reported that there was no tender process to independently determine the award of the construction contract. Two or three specifically designated companies were considered but in the end the contract was awarded to China Railway Construction Company.
Under the ‘negotiated’ contract, the local component ie. the amount to be spent locally in Fiji, is reported to be restricted to a low of 30%. The housing project is largely a construction activity and much of its requirements can be sourced locally. So a desirable local content percentage should have been 80% which would have seen some $56 million worth of goods and services for the project being sourced within Fiji.
But with the lopsided 30% local content, the amount now to be spent in Fiji is confined to a mere $21 million at best. The rest ($49 million) will come from China even though those goods and services are available in Fiji.
The rather low local content factor will deprive local businesses and contractors from bidding for the substantial components of the project.
More importantly, it is not known yet whether the homes to be provided under this project will really be low-cost and affordable for the low income earners. There is unease about this critical factor at the senior management and Board level, according to reliable sources within the HA.