Works and Transport minister Veikko Nekundi’s name has featured prominently in allegations that he coerced TransNamib into bending procurement rules in the N$2.6 billion project to modernise the parastatal’s locomotive fleet.
The Issue understands that the rail parastatal was forced to completely abandon its original procurement plan and heed ‘verbal’ instructions and pronouncements by Nekundi. Nekundi’s ministry denied this claim and labeled it as untrue.
The initial plan was to buy 23 new locomotives and rebuild seven old ones. This plan was scrapped a month ago to ensure that 17 old locomotives will be refurbished and only 15 new locomotives will be bought.
This, according to officials familiar with the situation, was done against the wishes of the TransNamib management.
TransNamib spokesperson Alina Garises flatly denied these claims in an email response. She said everything was done above board and that the management acted in consultation with the board of directors.
Officials both at the works ministry and TransNamib said that Nekundi cancelled the initial public tender process last year.
He allegedly then pushed for the project to be changed so that the number of remanufactured locomotives increased to 17. This was also accompanied with instructions that the remanufacturing contract be awarded to a joint venture between military company Windhoek Maschinenfabric, a subsidiary of August 26 Holdings and controversial Malaysian based SMH Rail. The joint venture was handpicked without any tender process.
Works and transport spokesperson Nelago Shivute told The Issue that Nekundi did not issue any direct instructions to TransNamib, even though he is empowered to do so by the country’s constitution and the company’s establishing act. She said both laws give the minister powers to direct TransNamib where he considers it necessary and when it is in the public’s interest.
The Issue has been reliably informed that SMH Rail appears to be the reason why Nekundi insisted on focusing on rebuilding locomotives rather than buying brand new ones.
SMH was placed into this joint venture to benefit from a TransNamib contract despite being embroiled in claims that the company allegedly forged a TransNamib letter and impersonated the parastatal CEO Desmond van Jaarsveld see separate story.
SMH Rail has been in the picture since 2018, with Cabinet at some point reportedly blocking the company from being directly handpicked by TransNamib for setting up a locomotive rebuilding plant.
However, the company’s name resurfaced last year. This was after a trip by Nekundi, urban and rural development minister James Sankwasa and TransNamib officials to the Kenya Railway Central Workshop in Nairobi. SMH Rail was also doing work for Kenya Railway. The Namibian in 2018 reported that Sankwasa, who was deputy works minister at the time, was a proponent of giving SMH Rail a TransNamib contract without going on public tender. The contract was stopped in its tracks by then works minister John Mutorwa, who insisted that SMH Rail will not get any special treatment, and that it must compete in a public open tender process. Sankwasa at the time, it was reported, also visited SMH Rail’s workshop in Zambia.
Sankwasa did not respond to questions sent via WhatsApp at the time of publication.
LOCOMOTIVES
TransNamib got a N$2.6 billion loan from the Development Bank of Southern Africa (DBSA) and Development Bank of Namibia (DBN). N$1.7 billion of this loan was supposed to directly buy 23 new locomotives. In 2022 TransNamib had decided to work with American company Webtec Locomotives to rebuild the seven old locomotives. This was because the company specialised in the General Electric locomotives that have proven to be reliable to TransNamib for over 70 years. The new locomotives were also going to be directly procured from General Electric. The process was started in early 2024, with TransNamib and the two development banks agreeing terms of the loans which also include approval of the preferred service providers. The Central Procurement Board was then roped in to kick start the process.
Nekundi then cancelled the process in April last year. His key objection at the time, The Issue understands, was the direct procurement from the American companies.
Thereafter a visit to Kenya and SMH Rail entered the picture again, after being out of sight since 2018.
In November, TransNamib was allegedly ordered to enter into a memorandum of understanding with Windhoek Maschinenfabric. The military company later entered into a partnership with SMH Rail for the establishment of a locomotive remanufacturing plant at Usakos. WMF did not respond to questions about its relationship with SMH Rail at the time of publishing.
BULLYING
After months of pushback the TransNamib management eventually succumbed to the minister’s demands in August. This was after a 12 August board strategic session between the board and the parastatal’s management. At this session the board allegedly instructed that the minister’s demands be implemented. The management kept requesting written instruction which never came. They allegedly pointed out that the procurement terms were set out in the agreements with the lenders.
The Issue has it on good authority that in some of the meetings, Nekundi would question whether the management is refusing his instructions or Cabinet decisions. He allegedly also made assertions that the management wants to sabotage President Netumbo Nandi-Ndaitwah and her plans for the country. The Issue has not only heard about Nekundi’s alleged threats and intimidation using his position, Cabinet or the President from TransNamib but also from officials working at parastatals under his ministry, as well as other ministries and agencies.
At the TransNamib annual general meeting held on 17 September, Nekundi allegedly made it clear that WMF must get the remanufacturing contract as direct procurement between two government entities and that SMH Rail will be responsible for building WMF’s capacity. He insisted that the procurement process must be completed regardless of pending technical specifications required and that the lenders will not be allowed to dictate the loan agreements because the government is responsible for repaying the loans. He allegedly also said he was carrying out Cabinet directives and allegedly told the meeting that he will not be sharing the said Cabinet directive.
He allegedly also insisted that the remanufacturing plant in Usakos must be ready to be officially opened by the president in November and that he will not accept excuses for that deadline not being met.
“It is therefore incorrect to suggest that the minister insisted on a particular number. The decision was a collective one made by the board and the executives, subsequently endorsed by the minister,” said Nelago Shivute, the works ministry’s spokesperson. Shivute said the ministry insisted that the decision to go with a higher number of rebuilds rather than new locomotives was informed by the fact that it takes nine to 10 months to refurbish a locomotive, while ordering a new one takes about 24 months, while the locomotives are urgently needed. The ministry also cited local employment opportunities to be created by the remanufacturing plant in Usakos and that the plan is to make TransNamib a locomotive remanufacturing hub in the SADC region.
However, rail experts have raised questions about the long term reliability and sustainability of a locomotive that is older than 70 years being rebuilt, as opposed to getting brand new locomotives.
Observers insist the inclusion of SMH Rail through the backdoor into the deal appears to be the motivation of completely changing the project midway.
