Stefanutti Stocks has started legal proceedings against contractors to the Department of Human Settlements in an attempt to recoup delayed payments. Photo: Simphiwe Mbokazi/African News Agency (ANA)
PRETORIA – Stefanutti Stocks, the listed construction group, has started legal proceedings against two contractors to the Department of Human Settlements in an attempt to recoup delayed payments.

Willie Meyburgh, the chief executive of Stefanutti, said there was an increasing trend among public and private clients to delay payments by delaying the certification of work and variations, which resulted in the group not being paid on time.

“It’s putting tremendous pressure on our working capital,” he said.

Meyburgh said the delayed Department of Human Settlement contractor payments related to four different housing projects.

He stressed that Stefanutti had not yet entered into a legal process but notified the two contractors that the group would if it was not resolved.

Meyburgh explained that these housing projects were awarded to emerging contractors and they sub-contracted certain work to Stefanutti.

He said part of the reason these emerging contractors were not paying Stefanutti was that they had also sub-contracted the infrastructure installation in the project to other developers, which was not being completed, while at the same time the municipality needed to link in the services.

Meyburgh said the Department of Human Settlements was not paying the developers, who in turn were not paying Stefanutti, until it could take occupancy of the houses.

“It’s fine to occupy the houses, but there is no water or electricity. At some point in time the development will be completed and we will get our money.

“But we are taking legal action against these developers and also the Department of Human Settlements because we cannot wait forever for our money,” he said.

Meyburgh highlighted challenges Stefanutti was experiencing on some other contracts and with some other clients, including long outstanding amounts due from the governments of Zambia and Nigeria that continued to be a source of concern.

“The total amount outstanding between the Department of Human Settlements, Nigeria and Zambia is R300million for more than two years.

"But a while ago it was sitting at R350m, so it’s coming down. That money is not at risk because it is undisputed,” he said.

Meyburgh said the group also had some contractual claims relating to the Kusile power plant and at Sasol on an oxygen plant for a multinational client.

He said they were doing the final account for the oxygen plant at Sasol when the client submitted a claim of about R30m the group had never taken into account because they had never been notified about it before.

Shares in Stefanutti closed 0.27percent up on the JSE on Thursday at R3.75.