Tender for Eskom's coal-fired boilers back in spotlight

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Eskom hopes to improve the performance of its coal-fired power stations.
Eskom hopes to improve the performance of its coal-fired power stations.
  • Eskom is appealing an October judgment that overturned the maintenance contract for boilers at coal power stations.
  • The affected company is Babcock Engineering, one of three original equipment manufacturers (OEMs) of boilers in SA.
  • However, Eskom's recovery plan has OEMs playing a crucial role.
  • For more financial news, go to the News24 Business front page.

Eskom, which has promised to bring in the best original equipment manufacturers (OEMs) to improve maintenance, is at the same time steaming ahead with litigation against one of them, which, if successful, will bar the company from maintaining the boilers it built for several years.

Contracting OEMs is a key part of the Eskom board's generation recovery plan. It is also a strategy endorsed by the National Energy Crisis Committee. There are only three OEMs of Eskom's older coal-fired boilers in SA: Babcock Ntuthuko Engineering, Steinmuller, and Actom. 

Hitachi is the OEM for the boilers at Medupi and Kusile. 

Babcock is the designated OEM of the boilers at Matla, Lethabo, half of the units at Hendrina, and Grootvlei 1 to 4 and 6. It is also the engineering company with the best knowledge of Kendall, as it has been responsible for maintenance since the power station began. 

While the maintenance contracts for the boilers were previously shared by Babcock, Steinmuller and Actom, in 2020, a new tender to the value of R16 billion was advertised. A year later, it was finally awarded to Steinmuller and Actom, while Babcock was disqualified for failing to submit a welding certificate that Eskom already had in its possession. 

A court overturned the tender award last October, finding that Babcock had been irrationally excluded as Eskom already had the certificate in its possession from earlier contracts. The court gave Eskom eight months to run a new tender, leaving the status quo in place for the interim so that the Eskom maintenance programme would not be affected.

But that was not the end of the story. Eskom resolved to appeal the judgment, which will be heard in the North Gauteng High Court in Pretoria on Friday. If the appeal goes in Eskom's favour, Babcock is excluded from maintaining Eskom boilers until 2025. 

READ | Eskom to appeal 'insensible' judgment against R16bn boiler maintenance tender

The Eskom board's recovery plan proposes intense maintenance of the six worst-performing plants, while protecting those that are the best performing. The six include Kendal, Matla, Majuba, Duvha, Tutuka and Kusile. 

Last week, briefing the public for the first time on the new board's generation recovery plan, chairperson Mpho Makwana said: 

"These stations must be prioritised by developing the best talent, sufficient capital and the best OEM support in critical plants."

Babcock is also the OEM for the best-performing of the older plants, Lethabo. It is unclear whether the board sanctioned Eskom's appeal against Babcock, as Eskom did not respond to questions by the close of business on Wednesday. 

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