Legal battle looms for Eskom - report

2013-07-14 10:05
Public Enterprises Minister Malusi Gigaba inspecting the Medupi Power Station near Lephalale in Limpopo. (Werner Beukes, Sapa)

Public Enterprises Minister Malusi Gigaba inspecting the Medupi Power Station near Lephalale in Limpopo. (Werner Beukes, Sapa) ((Picture: Werner Beukes/Sapa) )

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Numsa calls for Medupi investigation

2013-07-11 15:05

Numsa called for an independent investigation into alleged collusion by construction workers at Eskom's Medupi power station in Limpopo. Watch.WATCH

Cape Town - Eskom is preparing for years of legal wrangling to recover costs incurred by the delays from key suppliers at Medupi which have seen the power suppliers costs rise from R87bn to an estimated R105bn, excluding interest.

The utility awarded a R20bn contract for boilers to Hitachi Power Africa and R13bn for steam turbines and control and instrumentation software to Alstom in 2007. Eskom has now called performance bonds on both contracts after the suppliers failed to meet crucial deadlines, reported the Sunday Times.

According to the report, a standard feature in construction contracts, a performance bond is typically 10% to 15% of the contract price, placed by the contractor with a bank a guarantee. Eskom has called performance bonds from both suppliers but warned that refunds might be difficult to obtain.

Refunds from contractors would take a "long time" because Eskom would have to deal with massive legal contractual issues, said Eskom CEO Brian Dames.

Hitachi has already challenged Eskom in court. They said this week they had completed 97% of the work on Medupi’s unit 6 boiler and was on track to meet Eskom’s original December 2013 deadline.
Read more on:    eskom

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