Archive for September 16th, 2013

The Curious And Dysfunctional Iranian Prefab Housing Contract

September 16, 2013


Yesterday in El Universal, there was this curious tale about an Iranian company that sold the Venezuelan Government three factories to make prefab homes. The whole tale is one of the dysfunctionality that the Venezuelan Government has become. From start to end, the whole thing is a story of inefficiency, incapacity, commissions, fights and over payments. In the end, three factories to build prefab housing sit idle nine months after being handed over to the Government. Of course, all three factories were grandly inaugurated by some Government official and apparently only six houses have been produced by three factories with supposed capacity of 380 houses per week.

Meanwhile, the lawyer for the Iranian company that built the factories says he was ripped off. You see, Iranian companies can not work directly via the US because of the boycott, so that there are companies that charge 10-15% commission, according to the article, to “triangulate” the payments via Canada. Well, the US$ 2.8 million payment is apparently in some sort of limbo, as it was sent to one of these intermediary companies and never reached Iran. The Iranian guy even boasts that some of the equipment for the project traveled via the US, “without anybody” noticing.

Nobody knows why the plants are not working. One guy says they have not been completed. Another says that the Government has not received all the equipment. Meanwhile, apparently Bandes is asking that the US$ 2.8 million in profits be returned. And another guy charges that Venezuela paid twice for the same equipment, with one of them being just steel scrap.

The story is complicated and not easy to understand, but the end result is the same: Like so many other projects, Venezuela spent millions of dollars importing technology that likely was available in Venezuela, from a country that is probably more costly to do business with. In the end, it does not appear as if anything is happening or will happen with the project and the money was simply wasted.

A contract that simply shows how dysfunctional the Bolivarian Government is from beginning to end in most of the projects it manages.

(I also found this comment intriguing in this interview in the same issue of El Universal: An accusation that in some housing projects, the cost of the housing units ended up being US$ 294 thousand. Way to go! Theye were either huge, so much for popular housing, or a huge rip-off, you take your pick)