CAPE TOWN If the Cape Town city council awards a controversial tender to businessman Tokyo Sexwale to develop prime coastal land , it would discourage foreign investors , an Irish billionaire property developer warned yesterday.

Niall Mellon, whose company Earthquake could lose the tender to develop the 14ha parcel at Big Bay, near Blaauwberg, said the decision by a procurement committee, if ratified by full council next week, would cost the city billions of rand through lost foreign investment.

The committee recommended that Sexwale's Jonga Entabeni consortium be awarded the tender, despite its R115m bid being much lower than Earthquake's R147m, and Italian company Immobilfin Immobiliare Finanzaria's R151m.

The council looks set to award the tender to Sexwale's consortium next week, having had to rescind a decision last month after the findings of an appeals committee.

The tender , first awarded to Jonga Entabeni by mayor Nomaindia Mfeketo's mayoral committee earlier this year, was successfully appealed by the two losing bidders.

But on Monday night, the goods, services and property advisory committee again recommended that the tender be awarded to Jonga Entabeni because of its impeccable empowerment credentials.

The committee said the consortium's structure "satisfied community value" prescribed in terms of the Local Government Finance Management Act.

Mellon said his experience was that a decision favouring Jonga Entabeni would discourage foreign investment. "The motivation of the people who have made these decisions may be understandable in that they actually believe that awarding the tender to a local company, no matter how inferior the actual tender, is still preferable to giving it to a firm with a foreign component," he said.

Both President Thabo Mbeki and Finance Minister Trevor Manuel had spent "considerable time and effort" on initiatives to attract foreign investment, he said .

"In the case of Big Bay, Earthquake exceeded every criteria set down by the council in its tender document, and offered more than the flawed Jonga Entabeni proposal, and yet still lost," he said .

Bulumko Msengana, acting chairman of the advisory body, said the committee was satisfied that Jonga Entabeni had a reasonable and attainable development timetable . He said Jonga Entabeni's price was in line with the council's policy of disposing land at "anticipated market value".