MET wants to nullify NWR JVs
The Ministry of Environment and Tourism is currently in the process of seeking legal advice in order to nullify several joint venture agreements that Namibia Wildlife Resorts has entered into, The Patriot can reveal.
The ministry has since ordered that all current constructions/developments ongoing with regard to the Clamping project be put on hold pending the necessary approvals from the minister.
NWR’s board is also due to meet with MET minister Pohamba Shifeta to explain their decisions on the projects and joint venture projects signed.
According to an internal memo written by the ministry’s permanent secretary Seimy Christoph-Shidute dated 4 July 2018, addressed to Shifeta, no consultation was done neither was any approval granted for any new NWR joint venture agreements.
She said NWR had submitted the proposed project to MET for consideration and approval, however, the Ministry highlighted a number of concerns that needed to be attended to and therefore did not grant approval.
The deputy PS also indicated that the business plan and financial model of NWR have not been in line with the Integrated Strategic Business Plan guidelines proposed by the Ministry of Public Enterprises. The guidelines deal with the manner in which all public enterprises must conduct business as a standard and for the purpose of easy monitoring and evaluation of performance of public enterprises in terms of their business plans.
“NWR Business Plan highlights a number of initiatives to be implemented as part of their development and business growth strategy. Among the projects are the construction of Clamping Tented Camps at Daan Viljoen, Hobas, Sesriem, Waterberg and Etosha and the construction of 1500-1800 holiday houses at Mile 14,” she said.
She raised concern with the projects and both the proposed as well as the signed joint ventures.
In a document dated 4 March 2015, NWR’s managing director Zelna Hengari said the JV for the glamping is part of the company’s intent to turn around the financial performance of the company as well as to establish Namibia as the leading tourist destination on the continent.
How it will be operated ?
NWR at the time said the product route will start by collecting clients from the Hosea Kutako International Airport. Thereafter, clients will be transferred to the Daan Viljoen tented camp for a first night sleep over. Lodgers will then we transported by bus or train to Namutoni Camp for the second evening whilst the third and fourth evening will be spent at the Okaukuejo Glamping Camp. The Glamping camps are all identified to be joint venture camps. Thereafter, visitors will journey to the Sossusvlei Tented Camps and eventually be transported back to the airport.
Hengari said the product is designed in such a way that clients are retained at Daan Viljoen and NWR facilities. However Daan Viljoen is yet another joint venture agreement with Sun Karros which will result in a 50:50 model split of income.
Hengari further said the strategic partners involved in the product are NWR, TransNamib and Sun Karros.
NWR will provide its sites and infrastructure as well as market the product to its domestic and international markets.
TransNamib will provide is Desert Express Service under the PPP arrangement to transport clients while Sun Karros will put up infrastructure and services such as transport, tended camps, sewerage lines and water lines on the NWR sites at Namutoni, Okaukuejo and Sossusvlei.
According to Hengari, the agreement was already signed in 2014.
NWR MD explains controversial Sun Karros deal
When Namibia Wildlife Resorts informed the Ministry of Environment and Tourism that they plan to introduce a Glamping Project in conjunction with a private firm, it was met with stern opposition.
Both MET and Treasury expressed concern around the proposed deal saying it could cripple NWR. Treasury at the time proposed that NWR find ways to introduce the product on its own.
Hengari this week responded to questions from The Patriot regarding the matter explaining why NWR chose to go this route.
Regarding the joint venture with Sun Karros for the Glamping Tents at NWR sites, concerns have been expressed that NWR is putting up its most lucrative sites for PPP instead of the sites which are struggling. What is your take on this perception?
Glamping Tents is merely a product and not a new lodge. It, therefore, shall only enhance and complement our existing product offerings such as chalets, rooms and campsites with shared amenities. Consequently, we are not giving up any sites, and the Glamping product will be the property of NWR from day one.
Why would NWR prefer to share potential revenue from it with PPP partners instead of embarking on this project alone?
Glamping shall not cannibalise our existing products as they are aimed at different market segments. Which will have a different pricing model.
Why does NWR need Sun Karros to execute this project and what is the distinct business proposition that Sun Karros is offering to NWR in this business venture?
We partnered with Sun Karros because they had the concept for Daan Viljoen and we insisted on starting in Sesriem where we have the greatest need for beds due to the high demand experienced there. a. The intention is to roll-out the Glamping product as a multi-site route marketed as a self-contained offering to the visitors whose every request (within the law) is attended to. We believe that this shall be a first for Namibia and certainly for NWR
We understand the project only requires N$25 million to start, what prevents NWR to acquire those funds and start the project with 100% shareholding given the lucrative return on investment expected?
Besides being a proven well performing PPP, Sun Karros also has the financial resources to marry with our strategic locations for a “win-win” roll-out of this key product.
Glamping once rolled out fully shall cost more than the amount you referred to, and NWR does not have that kind of capital available.
The current Board and Management has stabilised NWR. The priority now is to secure financial sustainability by paying off the government-guaranteed debt at DBN which was used to finance the Turn Around Strategy as well as paying the historic liabilities at the Receiver of Revenue which accrued since the formation of the company in 1998.
A product such as Glamping is key in providing NWR with extra cash-flow that we shall use to deal with that debt and thus secure the company’s financial sustainability. We shall continue to seek out such “win-win” partnerships, and enter into product or location specific agreements with our partners. For example, we had two agreements with Tungeni Africa (one for Von Bach and the other for the miles at the West Coast).
NWR is already in a PPP with Sun Karros for Daan Viljoen, why is there need to enter into another agreement with the same company?
For the avoidance of doubt, partnerships with the private sector are explicitly provided for in the NWR Act. They are also government policy.
For example, recently, in a vote of confidence in the Board and Management of NWR, cabinet “directed that Zambezi Waterfront and Tourism Park is operationalised by NWR with own funds or through Public Private Partnership (PPP)”. You may recall that the Zambezi Waterfront and Tourism Park was established with its own Board and Management but has not been operational due to some challenges.
Do you foresee any potential conflict or competition to be created by this venture at the expense of NWR? For example, tourist moving from NWR managed facilities to the JV facilities and thereby reducing the income of NWR?
Any partnership NWR enters into does not involve the alienation of Namibian land that NWR merely hold in trust and is a “win-win” for NWR and the partner.
NWR workers want pay rise
Namibia Wildlife Resorts (NWR) services could be severely affected if it fails to heed to salary increment and other benefit’ demands requested by its work force.
Napwu, the union representing the workers, last month issued a request to NWR proposing for a salary increment.
“For the past two financial years, the Namibian economy has been doing very poorly, prices on consumables went up, housing you will not mention[sic], as it remains very high and very difficult for the NWR employees to afford based on our miniscule housing allowances.
Napwu proposed a 15% salary increment, 30% on top of the current housing allowance and an additional N$300 on top of the current transport allowance that currently stands at N$400.
“The issue of transport allowance needs to be relooked as it currently affects the total workforce at the camps.
This issue remains a very serious concern and if not considered fairly it can drain the little savings the company is making,” said Napwu’s General Secretary Peter Nevonga in a letter dated 6 June 2018.
NWR employees did not receive a salary increment for the past two years.
Workers who spoke anonymously to The Patriot said increased fuel and food prices would have a ripple effect on the prices of other commodities.
“The effects of inflation are not only impacting on the wider economy and government spending‚ but also on public servants and any other worker.
At NWR we are not spared either, I therefore believe that Napwu must stand by our side and support our cause,” said the source.
In 2016 NWR narrowly averted a strike over salary demands.
The company’s managing director Zelna Hengari at the time issued a statement in which the company refuses to increase workers’ salaries.
“NWR has over 1 000 employees on its payroll, making it the largest employer in the tourism sector.
In fact, a number of its employees are already surplus to requirements because the company really only needs 600 workers for its current operations,” she said.
According to Hengari, as a result of the huge workforce and the wage agreement signed with the Namibia Public Workers’ Union (Napwu) to add four additional leave days on a monthly basis to the workers’ additional leave benefits, the company’s expenditure soared.
Hengari was reacting following a collapse in new wage negotiations with Napwu.
The union demanded a 15% salary increase for employees in the A−B categories, and a salary increase of 12% for the C−D categories, in addition to a housing allowance of 50% for the A−B category employees, and 45% for the C−D categories.
However, in 2016 NWR only offered a 5% salary increase across the board in addition to taking back the monthly four−day leave benefit which the workers had been entitled to over and above their normal leave days.
Iipumbu questions Jooste’s powers
In the midst of a potential spat between the Namibia Wildlife Resorts (NWR) and the Ministry of Public Enterprises, the board chairperson of NWR Leonard Iipumbu has questioned the framework under which the ministry is operating.
Leon Jooste’s public enterprises ministry currently has no mandating Act, rendering it incapable to take legally binding decisions.
The Ministry was established in 2015, but till today, it has no legal mandate.
Jooste has often complained that the absence of such a mandate makes his job difficult because he cannot rein in SOEs that are not toeing the line.
Iipumbu wrote to Jooste on 16 July 2018 requesting that the ministry provides the framework within which it exercises its oversight role after Jooste wrote to NWR requesting for documentation related to joint ventures entered into by NWR and private firms.
Iipumbu, who was appointed to the board in 2015, said “this should be availed to us so that we all have a structured approach to reporting and compliance, rather than an ad hoc approach”.
“We believe that this framework should not be generic but be specific to NWR as size does not fit all Public Enterprises,” said Iipumbu.
In the letter, which The Patriot has seen, Iipumbu told Jooste that such requests “take up an inordinate amount of time of both the board and management.
Time which is necessary for us to focus on running the NWR which unlike many other Public Enterprises operate in a very competitive market.”
The former Agribank boss did not hold back in the letter and told Jooste that, whatever Ministry we are accountable to, “the Ministry is responsible for policy oversight and the Board is responsible for governance while management is responsible for strategy implementation”.
“Such a framework should also clarify and streamline the reporting lines for NWR towards the shareholder and also delimit the areas of responsibility clearly between the shareholder, the board and management.
This is important because if we as a Board start to micro-manage the company then we cannot hold management accountable.
Similarly, if the shareholder start to micro-manage the company then it cannot hold the board accountable,” he said.
An insider at the Ministry of Public Enterprises said Jooste was not impressed with Iipumbu’s letter because he felt the NWR does not recognise his authority.
Last week, The Patriot reported how NWR entered into some controversial joint ventures with private firms without getting the necessary approval from the line ministry.
NWR however maintains that it got all the necessary approvals.
However, sources told The Patriot that Iipumbu’s letter is likely to open the floodgates for other SOEs to defy orders and requests from Jooste.
“I am not surprised this is happening, the minister has no mandate, this is surely a loophole that the SOEs will take advantage of.
The President created this Ministry, it is however disappointed to note that he is not exerting more pressure to ensure that the ministry gets a legal mandate.
This actually means that since 2015, taxpayers money was spent on a Ministry that can be likened to an advisory body,” said the source.