Vrede Dairy Project controversy deepens – MEC’s reply creates more questions than answers

By Roy Jankielsohn, Leader of the Official Opposition in the Free State Provincial Legislature:

The Vrede Dairy Project continues to be shrouded in controversy. In replies to written questions posed in the legislature, the Department of Agriculture and Rural Development have admitted to have initially budgeted only R6 million for the project, but have so far spent R183 950 000 on this endeavour. They are continuing to spend money on the project that remains dependent on the Department.

In terms of a now cancelled agreement, an Indian company named ESTINA would have received a 49% share with a R228 million investment in the R570 million project, while the 80 local beneficiaries would jointly have received 51% of the shares through a government investment of R342 million. This implies that ESTINA would have obtained a 49% share with an investment of only 40% of the projected cost of the project. Without investing any money in the project, ESTINA received R183 950 000 as the implementing agent to develop infrastructure and purchase some dairy cattle. ESTINA was thus the implementing agent and shareholder until the contract was cancelled.

The management of the project has subsequently been taken over by the Free State Development Corporation (FDC). The FDC have indicated that the cow housing shed is inadequate, and that the processing plant that was built by ESTINA would require additional investment should research that is required indicate that it is at all viable. The replies also state that the project is a “community project”, however the FDC have admitted in a meeting of the Portfolio Committee for Economic Development in the Free State Legislature that none of the 80 beneficiaries are currently involved this project.

The replies also indicate that National Government discontinued its support for the project after a National Treasury investigation. Among the recommendations of the investigation was that the Head of the Department and Chief Finance Officer face disciplinary hearings. The MEC for Agriculture and Rural Development has however indicated in the reply that no disciplinary action will be instituted. The investigation was carried out at a cost of R868 447.33 and has subsequently been ignored.

The replies strengthen the DA’s belief that the project was never meant to milk cows, but rather the taxpayers. The latest replies will be forwarded to the Public Protector for inclusion in her investigation and findings into this project.

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