South African based road construction and rehabilitation company Raubex has halted construction on the R1.2 billion South African Rnds Link 8 000 greenfields road construction contract in Zambia because of the Zambia Road Development Agency’s failure to pay R115.5 million South African Rands owing on the project, according to South African Media.
Rudolf Fourie, the chief executive of Raubex, confirmed on 9 May 2016
that construction on the project was halted in February to prevent exposing the group’s balance sheet to debt it could not control.
However, Fourie remained optimistic that Raubex would be paid the outstanding amount and admitted the problem was when payment would be made and how the group could carry this debt on its balance sheet.
“We believe that in the next month or two we will get a payment, but it is a concern,” he said. “We would like to proceed and finish the contract, which is very profitable. We’ve done about 15 percent of the job,” he added.
The project involves two contracts in the north-eastern part of Zambia that involve the construction of 200 kilometres of new roads.
Raubex in November warned that the significant devaluation of the Zambian kwacha would impact on the future profitability of these contracts if the currency did not strengthen.