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)

22 Responses to “The Curious And Dysfunctional Iranian Prefab Housing Contract”

  1. m_astera Says:

    In Venezuela, a real house is made of masonry, which is adapted to the climate and the natural environment. Masonry heats up and cools down slowly, maintaining an even temperature. Unlike wood, it is not attacked by termites or ants, and rodents don’t easily gnaw their way in.

    I recall a friend telling me that when he lived in the US he was considering buying a condo, until he knocked on one of the walls and found it was just a thin sheet of gypsum drywall over hollow wooden framing. No sale.

    • Ira Says:

      Treated wood can’t be attacked by ants, termites or other critters. And the vast majority of homes in the U.S. are still done that way, framed with lumber:

      Nothing to do with the location–the United States encompasses all environments.

      What’s more, prefab mobile homes and REGULAR prefabs use hollow aluminum framing, because it’s lighter and cheaper than wood. So no pest problems THERE.

      I understand your hot/cold comparison, but that’s a minor issue. We have air conditioning and heating these days.

      What I don’t understand is your friend not buying a condo because of standard wood frame/drywall construction. It is a 100% acceptable construction method, responsible for MILLIONS of happy households in the U.S., and lasting for 100 years plus.

      • m_astera Says:


        Stick frame construction wrapped in plywood and drywall is cheap and fast, but not well adapted to the tropics. Lumber treating to prevent rot and insect attack is not all it’s cracked up to be. Pressure treating generally only penetrates 5mm or less; the remaining wood remains vulnerable. I have seen it rot completely in less than 5 years in a northern temperate climate.

        When steel or aluminum studs are used, the insulation factor becomes much more critical, as both steel and aluminum are excellent heat conductors (along with being sound/noise conductors. Where are the fiberglass insulation factories in Venezuela? Also, the country simply doesn’t have abundant electric power to run everyone’s air conditioning, not that the poor can afford A/C anyway.

        There is also a strong psychological factor: A masonry wall gives a feel and presence of solidity and security. A hollow wall skinned in plywood and gypsum will barely slow down a .22 bullet.

        Venezuela does not have the high-tech industry to make massive quantities of steel or aluminum framing, nor extensive forests of tall, straight, fast-growing conifer trees. It does have plenty of clay to make blocks, natural gas to fire them with, and lime (cal) for mortar and concrete. Brick and block construction is also something most Venezuelan workers are very familiar with. What are the ranchos made from? Brick and block and mortar, not wood or metal framing.

        I don’t see much future in building stick or metal framed hollow wall insulated boxes and convincing Venezuelans that is a real house.

  2. Ira Says:

    Miguel, are you sure about the nature of this housing?

    One category of prefab homes is actually simple MOBILE homes (not motor homes) which sit on cinder blocks or a slab foundation. As you know, they’re regular stick-frame construction with standard insulation, skinned in aluminum or fiberglass–not concrete structures at all. (Here in the states, even some Amish communities, specifically in Pennsylvania, are involved in their construction, so the construction technology is as basic as it gets.)

    Mind you, there’s nothing wrong with them at ALL. They can be built incredibly cheaply (efficiently and economically) with special considerations given to VZ’s weather conditions…and would be considered a HUGE step up for poor Venezolanos in need of decent housing.

    Of course, this would require development of land outside of Caracas proper, which as you recall, was one of Stupigo’s original ideas, and actually a GOOD idea–but of course, he fucked it up, as he did everything:

    His intent was to pull tens of thousands of VZanos away from Caracas to undeveloped parts hundreds of kilometers from the city, but no way to earn a living once they got there.

    A plan to develop lands within an hour’s bus ride to Caracas (or whatever from other VZ cities)…with modern mobile homes for housing…could have an incredibly positive impact on the country, and could serve as an opposition proposal that provides something very real with which to fight ignorant Chavismo with.

  3. […] incapacity, commissions, fights and over payments” at The Devil’s Excrement: The Curious And Dysfunctional Iranian Prefab Housing Contract. Supposedly Venezuela bought 3 factories for building prefab […]

  4. Shrillary Clinton Says:

    ah yes…Latin America…. where would we been without this constant source of amusement…..

  5. Deanna Says:

    I lived for a while in two houses built by the Fundacion Mendoza (60’s to 70’s), one in Puerto Ordaz and the other in Valencia. Those were sturdy, low-cost housing and probably still standing today. After that, I know that certain private companies tried some pre-fab housing, but I don’t know why they didn’t seem to be successful in Venezuela. I believe that Venezuelans prefer houses made of concrete blocks, rather than paper-thin pre-fab materials. With such talented ideas in the country, the professional people in construction to do the job (even some albaniles are great doing construction), I cannot understand why this Chavista regime has preferred giving the business to Iranians and Chinese, getting the non-results that are so obvious after 15 years of failure.

    • Kepler Says:

      Deanna, please! Because virtually all of those capable Venezuelans who can do anything will be found among non-Chavistas…even theoretical Chavistas would turn into oppos in no time if they had to deal with this government to produce something.
      For Boligarchs it’s better to blow away the country than to give away some power. And successful schemes carried out by the private sector would mean less power for Boligarchs.

  6. Noel Says:

    Actually, the technology to build low cost prefab houses was available in Colombia and in Europe, in case Venezuela didn’t want to deal with the US.

    • Algava45 Says:

      You’re right.Colombia has the technology to build prefab houses and is doing so to cover the goverment’s social programs.Also the Corporation El Minuto de Dios has this program.I think Colombia was a very good and low cost alternative for the Venezuelan Government,It’s a waste,the corruption won.

  7. Island Canuck Says:

    Very interesting comments last night by Nelson Merentes, Minister of Finance.
    He’s talking about a floating dollar that will be in addition to CADIVI & SICAD.

    Merentes: El dólar “va a flotar dependiendo de la conducta que se tenga”

    He says that Venezuela has the resources to meet the demand.

    If you think about it it would be a good way for PDVSA to meet their cash flow problems by selling into a free market & getting many more Bs. then they get now.

    He does say, however, that the market would not eliminate exchange controls which seems a little contradictory to me.

    • Deanna Says:

      I don’t believe that anyone of the Chavista regime actually knows what he/she is talking about, especially in the field of economics. That is why they are so contradictory, such as a floating dollar exchange rate and exchange control at the same time!

    • Kepler Says:

      Above all: they won’t devalue. Merentes already said in October 2012 they won’t devalue 🙂

      Read: they will create yet a new road for controlled exchange rate, things will help some get richer, steal more, but won’t be enough and in a few months we will have a new “readjustment” of currency exchange values

  8. OyiaBrown Says:

    Reblogged this on Oyia Brown.

  9. Dago Says:

    One of the (several) things that I find strange is the amount: only 14 million USD for machines able to make 380 houses per week?. Something doesn’t add up…

    • moctavio Says:

      This is simple technology, these are preformed molds to generate the building blocks of the houses, not rocket science.

      • Dago Says:

        Granted, it is not rocket science.

        But let’s suppose that this were a private enterprise: Assuming a very conservative profit of 5000 USD per unit, the 14 million USD are paid back in under 8 weeks. That’s a very suspicious ROI for any kind of legit business.

        • moctavio Says:

          Oh, I agree, I wish I knew the details, but the Iranian guy was hired only to set up, not to build the houses. When the Bolivar was at Bs. 4.3 per dollar you could buy a small prefab house for US$ 40,000, but the factories were big. I understand these projects just build three or four basic Lego pieces that are put together to form a house.

  10. NorskeDiv Says:

    So Venezuela supposedly relies on Iran’s expertise in building prefab homes, and Iran then goes and orders the equipment to make said homes from the US?

    Why even go through Iran? Was this just a way of funneling some money to Chavez’ buddy and making it look kosher?

  11. VJ Says:

    lunes 4 de febrero de 2013 12:00 AM
    Berlín.- Un iraní fue aprehendido al intentar entrar en territorio alemán con un cheque millonario proveniente del Banco de Venezuela, el detenido fue identificado como Tahmasb Mazaheri, el exministro de Finanzas iraní, aseguraron medios alemanes.
    Según la edición dominical del diario Bild, funcionarios de aduana del aeropuerto de Düsseldorf, Alemania, encontraron un cheque por 300 millones de bolívares, aproximadamente unos 54 millones de euros o 70 millones de dólares, en el equipaje de Mazaheri cuando intentaba entrar a Alemania procedente de Turquía el 21 de enero, citó AP.

  12. Maria Gonzalez Says:

    Miguel…pero tenemos patria! The sad thing is that people are paying more attention to Maduro’s accident in the bike and probably never read this article!

  13. m_astera Says:

    But still, cheaper than that satellite.

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