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Fueled by a poorly performing economy, political uncertainty and the need to downscale, investors in the luxury end of the South African private property market find their properties are sitting with for sale boards out for far too long and generally fetch lower prices than they bargained for – in some cases as much as 30% less. Carte Blanche examines why wealthy investors seem unable to realize the profit they had imagined when buying at the high end some years ago, while in the lower income segment of the market, opportunities abound for significant and growing returns on investment.

V&A desalination debacle: Seawater 400% more polluted than City’s tender data indicated

V&A desalination debacle: Seawater 400% more polluted than City’s tender data indicated

 

Editor’s note: The opinions in this article are the author’s, as published by our content partner, and do not represent the views of MSN or Microsoft.

The seawater feeding into the desalination plant at the V&A Waterfront is polluted by raw sewage from the Green Point outfall pipe and is sometimes up to 400% dirtier than specifications the City gave companies that tendered to build the plant.

This is according to Musa Ndlovu, director of Quality Filtrations Systems (QFS), the company that was awarded the contract to build the temporary desalination plant in January last year, when Cape Town was facing the prospect of taps running dry on Day Zero in early April.

Ndlovu said once they had found out about the high level of pollution, it had cost them millions to modify the plant to deal with it.

“The City gave us tender data about the feedwater – everyone that tendered had to work off the same data, not do their own tests – and we designed a plant accordingly. Then when we did tests during commissioning of the plant, we found contaminants that were not in the tender data,” Ndlovu said.

They warned the City, and then spent an additional R7m on installing extra equipment to ensure that the two million litres it produced every day met the national drinking water standards.

 

Breach of contract

This is one of several areas of dispute between the City of Cape Town and QFS, which has terminated its contract with the City and is now suing the City for R80m for breach of contract and for damages.

In its defence, the City has said a requirement in the tender was that the desalination plant had to be able “to cope with varying sea water quality conditions” likely to be found at the site close to the harbour entrance.

Ndlovu said desalination plants could handle normal variation in seawater quality, which was around 10%. To be on the safe side, the company had opted to build a plant that could cope with 30% variation of the seawater quality data the City had given them.

“But 400% is abnormal. We realised the variation was caused mainly by raw sewage – which the City itself puts into the sea. They didn’t disclose that in the tender specification data, otherwise we would have designed a plant fit for that purpose,” she said.

QFS has expertise in treating water contaminated with sewage: In 2010, it built South Africa’s first direct reclamation plant in drought-stricken Beaufort West, producing 2.3 million litres of drinking water from sewage effluent every day.

Ndlovu said QFS later found out that Leslie Petrik, a professor of chemistry at UWC, had written to the City in September 2017 to say the tender specifications were inadequate to produce safe drinking water, given the proximity to the Green Point sewage outfall pipe and the type of desalination plant specified by the City.

“She warned the City that the tender data excluded sewage contamination, but the City issued the tender in November without this data.”

Sewage contamination

On March 13 last year, the company’s desalination plant, complete with modifications to deal with the sewage-contaminated water, was ready.

The water it produced was tested by the City’s scientific services and by an independent laboratory, and was found to meet the SA National Standards (SANS) 241 for drinking water quality.

But then nothing happened.

Although Cape Town was still facing Day Zero, and the mid-March dam levels had sunk to 22% of storage capacity, and each Capetonian was restricted to only 50 litres of water a day, the City did not give the company the go-ahead to feed the 2 million litres a day of desalinated water into the system.

QFS wrote to the City several times asking for the go-ahead.

Instead, on March 29, the City’s water and sanitation department issued an instruction to QFS that it had to do a whole range of further lab tests, including tests for sewage contamination, as a “raw water baseline risk assessment requirement”.

The City offered to pay for the extra tests, because it had not been part of the initial requirement, but later said it would not pay.

“It was never a requirement for us to treat sewage contaminants. We had to spend our capital on treating the 400% abnormal feed water variation. Our plant always produced compliant water. They City has never questioned that. The City however decided not to compensate us for our plant upgrade and the high operating cost caused by them dumping sewage into the ocean,” Ndlovu said.

The City eventually gave permission for QFS to inject the desalinated water into the system on May 28 – but only 25% of the 2 million litres.

On September 4, six months after the plant was built and ready, the City finally give permission to inject the full 2 million litres a day into the system.

QFS managing director Herman Smit said the list of additional pollutants the City had told the company to test for was a “full spectrum” sewage analysis.

This proved, he said, that they had known about the sewage contamination.

“This is the only reason they delayed injection into the network. In retrospect they were very scared to accept final water as a result of the raw water sewage contamination, but never divulged knowledge thereof,” Smit said.

The company says the contract stipulates that the City would pay it monthly rental for the availability of the water, whether or not it was buying the water. It says it sent the City invoices for “rental” but these were not paid.

Disputes

“So many things went wrong. We had five disputes with the City. The contract says if there are disputes the parties must go to mediation. We tried to get the City to go to mediation, but they ignored us. In the end we had to go to the High Court to get an order to force the City to go to mediation,” Ndlovu said.

“And when they arrived, they came with five attorneys and an advocate. From Webber Wentzel. The mediation process was meant to take four days, but it took five months.”

Ndlovu says the City’s advocate conceded in the mediation that it had to pay QFS a monthly rental fee.

QFS wanted a mediation report, but the City said there was to be no report.

“We think they said no mediation report because they knew that it would be evidence.”

Ndlovu said they had been left with no option but to go to court to sue the City for breach of contract for non-payment of rental, and for the extra costs incurred from sewage pollution.

“We are saying to the City: ‘Pay us what you owe us and we will go on our way’.”

Asked to comment on QFS’ claims that the City had made no mention of sewage contamination in the specifications given to companies tendering to build the temporary desalination plant, the City said it rejected any implication that false information had been supplied to anyone “deliberately”.

Councillor Xanthea Limberg, mayoral committee member for water and waste, said the contractor who designed the desalination plant was responsible for “taking cognisance of normal variations in water quality” and for building a plant “robust enough to accommodate raw water quality during all seasonal variations”.

She did not stipulate the percentage of variation the City regarded as “normal”.

Seasonal pollution

Limberg said the seawater data in the tender documentation was from seawater analyses done in September 2017.

“Small areas of the coastal water around Cape Town are contaminated by various pollutants. This is variable and often seasonal.”

This was normal for any city, she said. Sources of contamination were vast and included “urban run-off, household discharge, stormwater discharge, treated effluent discharge from our wastewater works, various marine outfalls, urban litter, etc”.

Limberg said the seawater was tested monthly around the sewage outfalls, and every two weeks at bathing beaches.

She maintains the contract with QFS did not include monthly rental payment.

“QFS was responsible for the cost of establishing the plant, which cost would have been recovered by QFS through the sale of water to the City,” Limberg said.

Ndlovu said the company was disappointed with the City, which had a good reputation, and they had never thought their money might be at risk with a City of Cape Town contract.

“We are trying to understand it. There must be something big behind this. We heard that the V&A desalination plant was Patricia de Lille’s baby. There have been a lot of political wars, and maybe they’re trying to kill it off – but that can’t be done at the expense of a bona fide company,” Ndlovu said. DM

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KFC Shuts more store in chicken crisis

Delivery problems will mean some KFC outlets will remain closed for the rest of the week, while others will have a reduced menu or shortened hours.

About half the fast food chain’s 900 outlets in its UK-based division were still closed on Tuesday night.

That was fewer than the 575 closed as of Monday evening.

Last week the fried chicken chain switched its delivery contract to DHL, which has blamed “operational issues” for the supply disruption.

Earlier, a KFC spokesperson expected the number of closures to fall in the coming coming days as teams “work flat-out all hours to clear the backlog”.

“Each day more deliveries are being made. However, we expect the disruption to some restaurants to continue over the remainder of the week, meaning some will be closed and others operating with a reduced menu or shortened hours.”

DHL’s managing director of retail, John Boulter, said the delivery firm regretted the “interruption of supply” and apologised for the “inconvenience and disappointment caused to KFC and their customers”.

“The reasons for this unforeseen interruption of this complex service are being worked on with a goal to return to normal service levels as soon as possible,” he added.

“We are committed to step-by-step improvements to allow KFC to reopen its stores over the coming days.”

KFC has set up a web page where customers can find their nearest outlet that is open.

What caused the problems?

Until 13 February, KFC’s chicken was delivered by specialist food distribution group Bidvest.

But after the contract switched to DHL, many of the food giant’s outlets began running out of chicken products.

The GMB union said it had warned KFC that switching from Bidvest to DHL was a mistake. The change led to 255 job losses and the closure of a Bidvest depot, said Mick Rix, GMB national officer.

“Bidvest are specialists – a food distribution firm with years of experience. DHL are scratching around for any work they can get, and undercut them,” he said.

“KFC are left with hundreds of restaurants closed while DHL try and run the whole operation out of one distribution centre. Three weeks ago, KFC knew they had made a terrible mistake, but by then it was too late.”

The distribution network uses software developed by the firm Quick Service Logistics (QSL).

DHL said: “Due to operational issues, a number of deliveries in recent days have been incomplete or delayed. We are working with our partners, KFC and QSL, to rectify the situation as a priority and apologise for any inconvenience.”

A KFC spokesperson said the decision to change supplier had not been taken lightly.

“DHL have estimated that winning the KFC contract and opening the new distribution centre has created 300 new jobs,” he added.

How much is it likely to cost KFC?

KFC’s spokesman said he did not have a figure, but any calculation is likely to be complicated by the fact that 95% of KFC’s outlets in the UK are run by franchisees.

Some media reports say the crisis could be costing the chain £1m a day, but any such figure is likely to be guesswork.

What’s happening to KFC staff?

Workers are being encouraged to take holiday, but would not be forced to do so, the company has said.

It said that in the restaurants owned by the chain, staff on short-term contracts would be paid the average hours worked per day over the past 12 weeks, while those on salaries would be paid as normal.

“Franchisees will be seeking their own independent advice, but we’re encouraging them to adopt this policy too,” said the chain.

A KFC worker in London who contacted the BBC said he had not received any shifts for the past week.

“This problem isn’t our fault, but we are the ones who can’t work.

“I have got bills that come out of my account on Friday and I feel terrible about the whole situation. I am looking for a new job,” he said.

H&M apologizes following outrage over ‘monkey’ sweatshirt ad seen as racist

H&M has apologized for an ad featuring a young black boy wearing a hoodie with the word “monkey” on it.

Clothing retailer H&M is apologizing after fierce backlash over an ad that featured a black child wearing a sweatshirt that read “Coolest Monkey in the Jungle.”

R&B star The Weekend, who had collaborated with the brand on men’s collections in the past, announced he will no longer work with H&M after seeing the image.

 

Celebrities like LeBron James and Snoop Dogg also weighed in, altering the image to put a crown on the boy’s head.

“HM u got us all wrong!” James wrote on Instagram. “And we ain’t going for it.”

The controversy raised the question of how the ad could have made it through the editing process to be publicly displayed.

“It is obvious that our routines have not been followed properly,” H&M said in its statement. “This is without any doubt. We will thoroughly investigate why this happened to prevent this type of mistake from happening again.”

H&M’s stumble is the latest controversial ad to land a retailer in hot water. Urban Outfitters apologized in 2014 for a “blood-spattered” faux-vintage T-shirt that appeared to reference the 1970 shootings of unarmed students at Kent State. Another line of Native American-themed clothes and accessories drew protest from the Navajo Nationin 2011.

Shoppers on Amazon were outraged last year over a sweatshirt made by a company called ArturoBuch that appeared to promote anorexia. The New York fashion brand Uzi also faced criticism last year for its Refugee Dress.