Eskom shrugs off nuclear war

2014-09-07 15:01

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Eskom is putting up a massive show of bravado in the face of an impending review of a R4?billion tender awarded last month to French nuclear multinational Areva.

The state-owned power utility has called the bluff of Areva’s rival Westinghouse by claiming it will immediately implement the steam generator replacement contract for the Koeberg nuclear power plant near Cape Town, even though it will almost certainly be put up for review.

Implementation of the contract would mean the placing of massive orders by Areva.

If the review was to succeed, damages would follow.

The losing bidder, Westinghouse, this week dropped its urgent court application for an interdict to stop Eskom and the winning bidder, Areva, from concluding or implementing the contract.

The simple reason was that the contract had already been signed – but Eskom rushed to release a media statement celebrating that Westinghouse “has seen the light on this matter”. An urgent court hearing on Friday morning went ahead, but only so Westinghouse could force Eskom to release a host of documents – ones it believes will prove there was some kind of political intervention or impropriety to swing the tender.

These include minutes of meetings and internal reports that will be used in an urgent review process Westinghouse hopes will declare the Areva deal invalid.

A hearing was held in the judges’ chambers and Eskom was ordered to produce the documents within five days.

In the meantime, Westinghouse is threatening that Eskom and Areva will be wise not to start spending money in terms of their contract.

A Westinghouse spokesperson called this “not pulling out but rather raising the stakes”.

But Eskom called that bluff and announced that “with this matter behind us, Eskom is proceeding with the implementation of the Koeberg steam generator replacement project as planned”.

On Friday, the power utility called a press conference at its headquarters in Joburg, apparently to hammer home that message.

Eskom did add that it will launch an investigation into possible corrupt activities surrounding the steam generator deal.

But Eskom’s general manager of legal services, Neo Tsholanku, hinted that the investigation would also take a close look at Westinghouse’s sources.

He said it was important to investigate where “spurious claims”, which Westinghouse this week based much of its court paper on, came from.

The probe would include the so-called peddling of information to Westinghouse by Eskom senior officials over drinks at a bar, he said.

The US-Japanese Westinghouse and French company Areva had been involved in an intense bidding war for the tender for four years.

Areva was awarded the tender earlier this month, after which Westinghouse immediately launched its application.

An affidavit by Westinghouse SA’s managing director, Frederik Wolvaardt, portrays Eskom as making an inexplicable shift around August 15 after there had been every indication that its internal tender board and technical experts had been pushing Westinghouse as the preferred bidder.

Its case is based mostly on the anonymous allegations of four sources who are said to have had access to crucial meetings at Eskom.

Eskom slammed this “wholesale reliance on unfounded information from undisclosed sources, whose existence and credibility cannot be tested”.

Eskom’s replying affidavit, in the name of Matshela Koko, Eskom’s acting group executive for technology and commercial, tears into Westinghouse’s version of events but fails to dispel all the questions raised.

Koko mostly promises that the documents proving the tender was clean will be forthcoming and that Westinghouse really didn’t need to go to court to get them.

The crucial decisions and recommendations in the tender process came from two different bodies in Eskom. The first is the 30-person executive procurement committee (Excop). The second is the board tender committee comprising Eskom board members.

The Excop makes recommendations and the board tender committee decides. According to Koko, Westinghouse fell out of the running on August 12.

He said the Excop devised two alternative recommendations a few days earlier – one that gave the tender to Areva and one that went with Westinghouse.

It said Areva should win the tender if Eskom was to “have regard” for the advice procured from a Swiss consulting firm called AF Consult.

That’s exactly what the board tender committee did, according to Koko. Only on the next day did the minister get called in to approve the decision after a meeting with Eskom chair Zola Totsi, board tender committee chair Neo Lesela and Eskom acting chief executive Collin Matjila, he said.

This was meant to refute the Westinghouse allegation that the minister “must have been misled” at a meeting with Eskom bosses Westinghouse believes actually took place on August 15.

That alleged meeting is considered by Westinghouse to be pivotal.

Lesela was implicated on Friday by the Mail?&?Guardian for apparently exposing herself to French influence at a crucial stage of the neck and neck nuclear tender during a trip to France hosted by Areva partner Électricité de France (EDF) in December last year.

Lesela denied any wrongdoing.

Koko admitted that the delegation of the board tender committee had visited France in December, at the height of the tender. But he said Eskom had paid for the hotels and travel of the delegation, even though they were hosted and trained by EDF.

He said the board chair, Matjila, had approved the trip for the board tender committee.

“It is a normal process. The chair decided to equip the board. The delegates were not exposed to influence,” said Koko.

Westinghouse’s Wolvaardt said in his affidavit an Eskom source confirmed to Westinghouse that the board had accepted the technical committee’s recommendation on August 6.

Koko said the final vote took place on August 7 and Areva won the vote. But sources sympathetic to Westinghouse told City Press the vote was four to one in Westinghouse’s favour.

Westinghouse was originally awarded two-thirds of the contract back in February 2011 with Areva receiving the small remaining part.

But Public Enterprises Minister Malusi Gigaba did not back the decision and the tender was cancelled. Only later was the tender redesigned as a single, all-in contract.

Eskom began a new tender process at the end of 2011 with a new board, and this is apparently where the so-called “irregularities” started cropping up.

A Westinghouse representative told City Press the company believed the tender was above board until it reached the level of Eskom’s tender board last year.

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