Proposes changing the current hire contract deal to a hire purchase arrangement
Billy Ntaote
THE Ministry of Finance has proposed amendments to the vehicle fleet contract awarded to Bidvest Bank Limited, including changing the current hire contract deal to a hire purchase arrangement, the Sunday Express can reveal.
The proposed amendments, which will be deliberated on by the Cabinet on Tuesday, also entail increasing Bidvest’s mandate to not only managing the fleet, but also assisting in hiring vehicles from Basotho on behalf of the government.
The latest episode in the unfolding vehicle fleet services saga comes after the government entered into a 48-month contract with the South African financial institution on 10 August 2016.
According to the current contract, Bidvest Bank Limited would provide “possession, use and enjoyment of the vehicles for the contract period” with the government only having the option to buy the fleet at the end of its contract.
The arrangement contradicts claims by several ministers that the government was buying 600 of the vehicles for its direct full ownership from the onset with the remainder being leased from Basotho.
Finance Minister Dr ’Mamphono Khaketla had said while announcing the deal in June this year that Bidvest would only provide computerised fleet management services for the next four years.
However, the Bidvest contract clearly stipulates the government would not “acquire any ownership rights of any nature whatsoever” of the vehicles despite being registered as “owner”.
In the proposal document, a copy of which is in the Sunday Express’s possession, circulated to Cabinet ministers this past week, the Ministry of Finance seeks approval for a hire purchase arrangement for the vehicle fleet deal.
“The government of Lesotho fleet should be purchased through a hire purchase agreement with Bidvest Bank Limited,” reads part of the document.
“Cabinet will recall that at its meeting of Tuesday 7th June, 2016 approval Memorandum Number 70, which stated as follows:
“i) That tender number 7/2015-2016 to engage a fleet service provider be cancelled.
- ii) That Bidvest Bank (Fleet and Asset division) be engaged on a four-year contract (1 July 2016 to 30 June 2020) to provide a Fleet Management System for Government Vehicles.
“Cabinet is invited to note that the recommendations in paragraph 1 above were part of Memorandum Number 70 which Cabinet approved (paragraph 4, thereof and herein attached), however for avoidance of doubt and for providing the Ministries with a clear directive for budgeting and payment purposes, the Ministry has decided to submit this Memorandum, that separates these three activities . . .”
The ministry further states that the implication of the approval would be that the contract would have three sub-agreements: “instalment sale, fleet management, assistance by Bidvest to hire vehicles from Basotho on behalf of government.”
The document also reveals the Cabinet Fleet Sub-committee met and endorsed the request.
Contacted for comment, Dr Khaketla said the document remained a mere recommendation which was yet to be approved.
She said the proposals were also meant to make work for Ministry of Finance officials easier.
“All it does is to break down the agreement into three parts for easy management, but it hasn’t even gone to Cabinet. It’s just a recommendation from my staff to make life easy for them that we are discussing internally,” Dr Khaketla said.
However, it was not clear whether the government would be required to pay more under the proposed arrangement.
Earlier this month, Dr Khaketla stressed that under the agreement government has made with Bidvest, the monthly cost would not exceed the budgeted amount of M16 million per month.
“This will be achievable because of the stringent measures that will be taken to monitor vehicle utilisation through driver tags and vehicle tracking,” the minister said in a statement issued on 7 October.
She said the government had purchased 283 vehicles at the time, adding they were already being allocated to ministries.
Dr Khaketla also said they had received 1 789 applications from Basotho to lease their vehicles to government.
“The process of assessing the applications is currently underway to identify the 600 vehicles that the government will lease from Basotho,” she said.
Opponents of the contract are likely to feel vindicated by the proposed amendments, since they have argued the deal was not cost effective and short-changed local businesspeople.
Bidvest had originally been awarded a six month contract to run the government fleet from 1 October 2015 to 31 March 2016 after the expiry of the government’s fleet management contract with Avis.
The government had promised to exclude Bidvest from any new tender to find a new fleet management firm to replace Avis. However, the government cancelled the tender process, preferring instead to enter a new long-term deal with Bidvest, which had not bid for the tender as earlier agreed in light of its enjoyment of the six month contract.
A joint venture company shortlisted for the tender has since gone to court seeking an order to stop the government from engaging Bidvest Fleet Services.
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