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A R1.3bn student housing project at the University of Limpopo (UniLim), designed to provide nearly 3,000 beds, is 98% complete but has been unoccupied for over a year.
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The project is a public-private joint venture between the Public Investment Corporation (PIC), which holds 70% equity (funded by state pensioners), and K-SL Student Hotel, which holds 30%.
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The project’s delays have resulted in over R100m in lost revenue and a protracted legal battle in the Pretoria High Court.
The Financial Dispute
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K-SL’s Claim: K-SL director Gregory Mofokeng has filed an urgent court application to compel the PIC to release R39.8m in overdue payments to primary contractor Raubex Building, and R4.3m in fees to professional consultants.
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The Cost Overrun: The payment impasse stems from a Second Variation Order (VO2) requesting an additional R90.5m. This would push the total budget from R1.13bn to R1.36bn (a 21% escalation).
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Reasons for Overrun: The extra funds are needed to cover Eskom-related delay claims (R47m), contractual price escalations (R22.7m), and fire safety/staircase additions (R8.3m).
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PIC’s Refusal: The PIC management committee voted against releasing the funds.
Consequences of the Impasse
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Contractor Walkout: Primary contractor Raubex has issued a 14-day notice of intention to terminate the building agreement due to unpaid claims.
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Financial Distress: The nonpayment poses a balance-sheet distress risk to the JSE-listed Raubex (in which the PIC also holds a stake). The joint venture is reportedly losing about R170m annually.
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Impact on Students: Thousands of students are unable to secure campus accommodation and are forced to live in back rooms under poor conditions.
Arguments from Both Sides
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K-SL’s Position: Mofokeng accuses PIC officials of abusing their majority voting power to “starve the project of capital” and acting in bad faith.
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PIC’s Defense: The PIC denies allegations of bad faith. Head of properties Malihuli Mthuli states that refusing to sign off on additional capital is grounded in fiduciary prudence. The PIC argues that releasing unfunded mandates would breach statutory duties under the Public Finance Management Act (PFMA) and that the financial impact (IRR) of the 21% budget escalation has not been quantified.
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Raubex declined to comment due to ongoing legal proceedings.
