R1.3bn Limpopo student housing in limbo

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Opens in new windowOpens in new windowOpens in new windowOpens in new windowEnter fullscreen mode displaying this image.ExpandAn artist’s impression of the UniLim student precinct project near the University of Limpopo outside Polokwane. Picture: Supplied Story audio is generated using AI

An ambitious R1.3bn student housing precinct at the University of Limpopo, constructed with a vision of providing nearly 3,000 beds, remains locked behind security gates at 98% completion for more than a year.

Funded by the Public Investment Corporation (PIC), the UniLim student housing precinct was designed as a flagship public-private partnership project. Instead, it has degenerated into a protracted legal battle in the high court in Pretoria, leaving state pension funds severely exposed and thousands of students without secure accommodation.

The delays have also resulted in more than R100m in lost revenue.

In April, a private developer, the black-owned K-SL Student Hotel, filed an urgent application against the PIC and its underlying public pension funds, seeking an order compelling the immediate release of more than R44m in overdue payment certificates and professional fees.

In the application, K-SL director Gregory Mofokeng highlights that the administrative block has effectively halted final commissioning of the project and threatens contract termination by the primary contractor, Raubex Building, and the professional consultants. This would have dire consequences for the project.

Another consequence of termination is that the joint venture will have to appoint another contractor to finish the job

“A termination of the contract will also require demobilisation from the site … This will cost more than R3m. This would be an unnecessary waste of public money,” Mofokeng says.

“Another consequence of termination is that the joint venture will have to appoint another contractor to finish the job. The appointment process alone will take a long time, cause further unnecessary delays to the finalisation of the project and incur millions of rands in wasted expenditure.”

The UniLim development was conceptualised in December 2017 as a social infrastructure initiative aimed at delivering 10,000 student beds across Limpopo province. This was to be done through the K-SL co-ownership joint venture.

The structure saw the PIC put in R1.2bn of pension funds in return for 70% equity, while K-SL would put up R600m for the remaining 30%. Operational management is overseen by a management company comprising three PIC representatives and two K-SL representatives.

Under a clause of the joint venture agreement, major investment decisions require a unanimous vote.

Severe delays in the project began when Eskom failed to complete critical power grid and substation upgrades in the Mankweng area by the scheduled deadline of June 2 2025. The power utility managed to provide only a temporary 20% electrical connection in July 2025, pushing full permanent power completion to April this year.

As construction dragged on, unpaid contractor claims accumulated, and by September 2025 site operations entered technical suspension.

In April, Raubex issued a formal letter of demand for unpaid interim payment certificates (IPCs), followed by a 14-day notice of intention to terminate the building agreement.

Faced with impending contract cancellation, K-SL launched the urgent application seeking an order to compel the management committee to release R39.8m in overdue IPCs to Raubex and R4.3m in approved fees to project consultants, including GIBB, Abakali Group and Zutari.

The payment impasse stems from a second variation order (VO2), tabled to the management committee in October, requesting R90.5m in additional capital expenditure.

The extra funding was requested to cover:

Approval would push the total UniLim project budget from R1.13bn to R1.36bn, a 21% aggregate escalation.

The crisis also presents a “double exposure” for public sector pensioners, as the PIC also holds an approximate 30% equity stake in Raubex. The prolonged nonpayment erodes value in the underlying student housing asset while exposing a major JSE-listed contractor to balance-sheet distress.

In his founding affidavit, Mofokeng warns of harsh realities facing vulnerable students if the facility remains closed. “There is also the real risk of thousands of students not being able to secure proper accommodation at the start of the next semester and being forced to continue living in back rooms and other modes of inferior accommodation, which is clearly not conducive to learning and a fulfilling tertiary experience,” he says.

The applicant’s allegation … that it seeks to protect the PIC JV Participants’ interests, is misguided

He accuses PIC officials in the management committee of abusing their voting majority to starve the project of necessary capital. “The nonpayment of the amounts in issue is on account of the PIC JV participants’ exercise of their contractual entitlement, taking a decision to vote against the resolutions in favour of payment,” he says.

“The joint venture is losing approximately R170m annually as a direct result of not having the UniLim project operational … This conduct cannot be countenanced.”

PIC head of properties, Malusi Mthuli, in the corporation’s answering affidavit, denies allegations of bad faith or obstruction, saying that releasing unverified funds would breach statutory duties under the Public Finance Management Act.

“The applicant’s allegation … that it seeks to protect the PIC JV Participants’ interests, is misguided,” he says.

Mthuli says the PIC’s refusal to sign off on additional capital was grounded in fiduciary prudence. “The votes against approval were cast for the reasons recorded in the minutes … The submission was not signed by PIC’s team; no attorney’s report had been provided; the cumulative VO1 and VO2 escalation amounted to approximately 21% of the originally approved budget; the IRR impact had not been quantified … [The] PIC seeks to protect public funds, which is the responsible and prudent thing to do in the circumstances.”

Raubex said that as the matter was the subject of ongoing legal proceedings, “we are unfortunately unable to comment further at this stage”.

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