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Mozambique’s National Social Security Institute (INSS) has announced that it has taken possession of the building that is supposed to serve as its new headquarters in Maputo, but the construction company involved considers the claim “illegal”, a company source has told Lusa.
The INSS announced in a statement on Saturday that it had moved to take administrative possession of a 16-storey building under construction by Mozambican construction company Nadhari Opway, for alleged breach of contract.
INSS Director General Alfredo Mauaie said the INSS had already “paid more than 90 percent of the total cost, while the execution of work was just over 75 percent”, and that it had decided the promoter of the business was unable to complete and deliver the building.
Mário Macaringue, director general of Nadhari Opway, calls the INSS’s claim “illegal and unfounded”, and told Lusa that the conflict originated in the strong devaluation of the metical, the Mozambican currency.
At stake is a promise-of-sale agreement in the Mozambican currency entered into in September 2014, according to which the INSS was to pay 1.5 billion meticais to Nadhari Opway for the construction of the property in central Maputo.
When the contract was signed, the US dollar stood at 40 meticais, but two years later the Mozambican currency had already devalued by more than half, raising the cost of the work.
According to the construction company, a commission established in October 2017 in consultation with the INSS evaluated the works and concluded that Nadhari Opway should receive a 108 percent increase over the initial value.
At the end of the negotiation, that increase was cut in half, because “the company’s image is important”, and it opted to add only what was necessary to complete the building without losses, Macaringue added.
The INSS version in Saturday’s communiqué, is different, with Alfredo Mauaie calling the compensation claim for currency devaluation “absurd” and without “legal framework”.
“The INSS could not accept the business promoter’s claim,” he said.
“We are surprised by the INSS’s position,” the Nadhari Opway director general told Lusa, saying that he was awaiting a decision by the Mozambican Administrative Court, where an action was taken to resolve the dispute.
Meanwhile, he added, the company was contacting other potential buyers for the 16-storey building, since the building and the site both belong to the construction company.
The property is in the finishing stages and, although the entrances and exits were blocked by the INSS action on Friday, workers were carrying on as normal, he concluded.