Eskom names contractors in R4 billion Kusile overpayment

  • According to Eskom, ABB South Africa owes R1 billion due to overpayments on the Kusile power station construction.
  • Tenova Mining and Minerals owes R735 million, Eskom says, while Tubular Construction Projects owes R1 billion.
  • Stefanutti Stocks Basil Read JV and Stefanutti Stocks Izazi JV owe R1 billion, according to the power utility.

Construction companies ABB South Africa, Stefanutti Stocks and Basil Read Joint Venture, as well as Tubular Construction Projects have been named by Eskom as some of the contractors that benefited from overpayments totalling R4 billion in the construction of Kusile power station.

This is according to a letter from Public Enterprises Minister Pravin Gordhan to ANC Chief Whip Pemmy Majodina, dated 6 June.

The development of the coal-fired facility has been marred by massive cost overruns and delays, with claims of corruption involving senior Eskom officials. The matter of overpayments is being investigated by the Special Investigating Unit (SIU).

Eskom itself detailed the payments to Parliament's Standing Committee on Appropriations, saying ABB, Stefanutti Stocks and Basil Read JV, as well as Stefanutti Stocks Izazi JV and Tubular Construction received an R1 billion in overpayment, while Tenova Mining and Minerals got R735 million.

ABB was appointed using a closed procurement tender process and the strategy included three suppliers who had previous experience with the Hitachi Boiler and Alstom Turbine combination. The contract was for the installation of control and instrument system for the six units of the plant.

"The SIU is in the process of finalising its own investigation. A number of meetings took place during 2019 and 2020, during which the parties discussed the process for establishing the value of the over payment made to ABB," read Eskom's response.

It further revealed that initial engagements with ABB had resulted in the company verbally offering to pay back approximately R240 million.

"Numerous employees, including the then project director, employer’s representative and contracts managers are being investigated by the SIU."

Tenova Mining and Minerals netted an estimated R735 million and two Eskom officials involved in the contract had resigned prior to the SIU investigation. 

The state-owned power producer has been crippled by operational challenges, including the servicing cost of its infrastructure and the rising costs associated with the construction of Kusile and Medupi power stations.

Consulting firm Deloitte previously agreed to pay back R150 million to Eskom, which is saddled with R450 billion in debt. It also wants PwC to pay back R95 million it received in consulting fees.

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