Struggling South Africa construction giant Basil Read says it has completed the Olifants Water Resource Development Project for Trans-Caledon Tunnel Authority (TCTA) despite the Covid-19 pandemic.
In its latest report to shareholders seen by Construction and Civil Engineering news, the construction company also acknowledged that the Olifants Water Resource Development Project was the most complex project it has undertaken in recent years with a significant liability that adversely contributed to the company’s financial distress.
The company won the tender for the project in 2012.
Although struggling to stay afloat due to dwindling construction jobs in South Africa and the effects of the Covid-19 pandemic, Basil Read says it has managed to complete most of its constructs a major milestone given the circumstances.
“There are 2 construction contracts that are still active versus twenty-seven (27) contracts at the beginning of rescue proceedings. Most of the contracts have been completed, ceded or descoped amicably. Only 4 contracts were terminated,” the company says in a statement.
The construction company also observed that the site activities that were suspended due to the impact of the Covid-19 virus and the subsequent national state of emergency declared by the South African Government on 26 March 2020 and State of Emergencies declared in Botswana, Namibia, Lesotho and Swaziland have resumed gradually.
“We continue to pursue contract claims; however, the process remains protracted and costly,” said Basil Read noting that it had managed to register significant success in the resolution of many such claims.
The claims processes, the company observed, have also been impacted by the Covid-19 related lockdowns, particularly the matters that were to be heard in Courts or Arbitration.
“Despite these delays and uncertainties Basil Read Limited successfully obtained judgements and rulings in its favour for outstanding payment certificates.”
Its mining business however has been able to withstand the Covid-19 threat to get two new contracts in Namibia.
“The Mining Services and Developments Businesses were also adversely impacted by the pandemic with various clients declaring force majeure and certain long-term contracts being terminated with several retrenchments as a result, particularly within the Mining Business. However, these businesses have managed to preserve cash in order to remain sustainable despite the impact of this pandemic.”
Regarding the business rescue plan, Basil Read said, “the implementation of the Business Rescue Plan of Basil Read Ltd. continues. However, its effect at a group level remains uncertain until it is completed. Therefore, the suspension will remain in place until the implementation is complete and the effects on the group can be determined.”