Move to settle Coega payment wrangle

Department of Health agrees to pay R24m but disputes R159m in unpaid fees

Following legal action filed against it for the recovery of R159-million in unpaid fees, the Eastern Cape Department of Health has agreed to pay R24-million to the Coega Development Corporation – but still insists that it is being overcharged.

The Coega Development Corporation brought an application for summary judgment against the Department of Health based on its contract to act as an implementing agent.

When the matter came before court, the Department of Health agreed to pay a number of the invoices.

According to an order issued by the Port Elizabeth High Court on March 28, the money must be paid by May 14.

The dispute has led to delays in 30 public health infrastructure projects and another 20 planned projects being placed on hold.

Superintendent-general Dr Thobile Mbengashe said the dispute had now been referred for arbitration to sort out the rest of the claims.

“We should state that the Coega Development Corporation took the department to court in the middle of a negotiation aimed to verify the claims made for R159-million.

“The department is of the view that the money owed is less than the claim.

“We offered to pay the R24-million based on the verified invoices that we believe the CDC has earned.
“The CDC accepted the offer and agreed to go to arbitration to verify the claims against the department.

“The matter was then removed from the court roll to allow the process of arbitration to resolve any further disputes.

“The department is committed to pay any monies owed to the CDC but we also have fiduciary responsibility to ensure that state funds are paid for verifiable obligations,” Mbengashe said.

The department remained optimistic that it could speedily resolve all outstanding issues, he said.

CDC spokesman Dr Ayanda Vilakazi said the corporation would now also litigate to recover the rest of the R159million fee bill owing to it.

He said the Department of Health has been ordered to pay the R24-million before May 14.

“Despite numerous letters of demand and subsequent meetings, the CDC did not receive any of the money owed by the Department of Health,” Vilakazi said.

“We then brought an application for summary judgment against the department. In response to this the department offered to pay R24-million,” he said. Thirty projects, including the construction of four community health centres and six hospitals, have been delayed by the dispute.

The disputed fees were for the CDC to act as the implementing agent for the department in managing healthcare infrastructure planning, development and facilities management in the Bay and elsewhere in the province.

The CDC claimed that a senior health official was withholding fees irregularly in an effort to force it to only use certain service providers favoured by the department.