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FS failed to conduct feasibility study for #Estina project

───   KATLEHO MORAPELA 15:59 Tue, 08 Oct 2019

FS failed to conduct feasibility study for #Estina project | News Article

The Free State Department of Agriculture failed to conduct a proper feasibility study, draw up a proper business plan, or follow proper technical processes before coughing up millions for the controversial Gupta-linked Estina project.


According to the National Department of Agriculture, Forestry and Fisheries’ Programme Management Coordinator, Elder Mtshiza, the department was excited over the project when the provincial department first approached them but withheld conditional grants for the province once they discovered that there were several flaws with this multimillion-rand project. Testifying before the Zondo Commission, Mtshiza said there were a number of red flags with regard to the project as their dairy expects and agriculture economists highlighted concerns over assumptions made and projected profits.

She said the provincial department was then directed to conduct a proper feasibility study for the project, which will then inform a proper business plan and conclude an application for water rights.

Mtshiza says the basis on which the approval for this project was made was false. “The quantities which were projected in that plan were too ambitious and not even achieved by the high-performing dairy producers in the country and the province must also conduct a biological impact study. For these reasons we could not continue funding the project because we believe all technical processes were not followed and funds must be withheld.”

She confirms the national department withheld an amount of about R53 million.

Mtshiza says they then informed the Director-General about these concerns and issued a letter stating that funds should be withheld and that the balance of the funds could be released back to the national revenue fund or support projects within the province which still needed funding.

She told the commission that despite their concerns, the province nonetheless continued with the project.

In August, the Free State former Agriculture head, Peter Thabethe, during his testimony came under fire for signing off on the project without doing any risk assessments. This was after the Commission heard how Estina’s account only had a balance of about R16 on 4 July 2012, days before the provincial government deposited an amount of R30 million into its account.

State capture inquiry evidence leader, advocate Leah Gcabashe, grilled Thabathe over what she said was irresponsible of the head of the department and asked Thabethe how he was expecting Estina to keep their end of the bargain, without money in their account.

The Gupta family and their associates allegedly looted more than R220 million meant for the project to help emerging black farmers. This after the Agriculture Department paid over R200 million into the Gupta-linked Estina’s Nedbank account, which was thereafter moved to the Bank of Baroda pool account.


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