Hosea Kutako refurbishment plan to gulp N$680m

07 Jul 2013 14:00

Government will spend N$690m (US$69m) to refurbish the Hosea Kutako International Airport (NAC) if the Namibian Airports Company’s grand master plan is carried through.
According to documents availed to The Villager, the NAC engaged an American company, Louis Berger Group Incorporated to draw up the master plan for both Hosea Kutako International Airport and Eros Airport.
The NAC has an option to either refurbish Hosea Kutako or Eros so that it can accommodate international air traffic.
NAC Board chairperson, Ndeuhala Katonyala confirmed the grand master plan which if carried out is likely to be completed by 2023.
Katonyala also said they have not yet sourced any funding for the massive projects but will most likely rely on Government to foot the bill.
“It a question of money on this one. But the plan has not yet reached Cabinet level and we are still making amendments to it. It is difficult to say how soon we would want to get this in motion and with this being a massive project, it could take a while, even years to bring it to fruition,” she said.
According to the Louis Berger report, NAC would require US$68 896 219 (N$681m) to carry out the refurbishments at Hosea Kutako alone and if they are to also refurbish Eros, the figure will come down to US$48 631 296 (N$490m).
But for Eros to be refurbished, NAC needs to lift the moratorium for international arrivals.
There is also a payment and funding plan that has been proposed that will include loan facilities, non reimbursement financing, capital from private investors and allowances for capital expenditure as part of the central government budget.
However, The Villager understands that the Minister of Works and Transport, Erkki Nghimtina has approved the US master plan after the final draft, that includes comprehensive costs estimates after it was presented to the NAC at the end of 2011.
The NAC board of directors also approved the plan but it was pulled back as they felt several changes needed to be effected.
Initially, the first phase according to the master plan was due this year already.
In addition, Nghimtina earlier argued that at least N$800m was needed to add features that were not covered by the initial report, such as a second runway at Hosea Kutako but aviation industry experts dismissed the minister’s view saying it was contrary to the projections in the Louise Berger report.
They argued that the volumes of aircraft movement will not require a second runway until at least 2030.
Passenger forecast figures for the period under review also do not warrant an extra runway, the report currently predicts.

Costs and projections
Furthermore, the report calculated that costs for the project will factor in costs estimated for construction and engineering including design, construction and supervision excluding value added tax (VAT).
Costs are also based on the planning level of detail and rely primarily on unit pricing estimates and limited to only airport projects excluding roads.
The figures estimated for the completion of the project do not also include any possibilities of land acquisition for expansion if by any chance they creep in.
The research consultancy firm also used a 20% contingency fee used during cost estimates calculations because drawings are still at a planning level and it’s still to receive confirmation.
According to the Louis Berger Group Incorporated, the contingency cost allowance is added to the construction cost estimate in order to account for the fact that the estimates are based on a planning level of detail.
Katonyala, however, did not want to confirm any figures but conceded that it could run into billions by the time the project commences.
Asked what could be the delay to get the process started, she said: “There is no delay. If you have money you can give us to make it go faster, please do.”
However, the breakdown of figures presented by the research company shows that the construction of a taxiway on the west wing will consume N$74m, new parallel shoulders west wing will cost N$73m while new parallel taxi wing eastern side, new parallel taxiway shoulders east wing are collectively estimated to be close to N$100m.
All calculations, however, are subject to change either slightly up or down whether the project is fully implemented or not depending on the performance of the Namibian dollar against the US currency.
There are also other construction works including the erection of new arrival terminal as currently the airport uses one terminal, ARFF airside road construction and PTB access road.
According to the report, the refurbishment of the Hosea Kutako which will come at a rather biting cost for a small country like Namibia.
The report says it is necessary as the current set up is congested and falls short of the expected international standards.

Govt loans
Research done by the consultancy firm also gives government the option to approach multinational lending institutions including the African Development Bank (AFDB) in cases where they decide to go it alone without engaging in public private partnerships.
“Under this option, Government provides all the required investment or obtains loans financed by international organisations or multilateral banks such as AFDB. The actual investment could be contracted under a turnkey contract which includes design and construction but ultimately the government is responsible for all investments and all financing cost,” the master plan noted.
The grand master plan also shows that the government has been given the option of an autonomous organisation and the right to collect user fees and develop commercial activities.
In this case, private investments may be attracted for the specific activities with the Government owned corporation having the power to contract private commissionaires and service providers of various functions.
However, considering the technicalities associated with contracting a private contractor, Government is most likely to choose doing the project on their own in order to retain all the managerial positions afterwards.
What also put Government into a precarious position is that should they choose to settle with an independent contractor then, there might be a need for legislation change to give that mandate away and this could result in the escalation of the original prize because of delays.