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Eskom denies Duvha irregularities, says contract to be awarded next week

22nd June 2016

By: Terence Creamer

Creamer Media Editor

  

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State-owned electricity utility Eskom reported on Wednesday that it would conclude a process for appointing a supplier for the replacement of the 600 MW Duvha Unit 3 next week, while strenuously denying procurement irregularities.

Eskom said three suppliers were participating in the commercial process, which was being conducted in line with the Preferential Procurement Policy Framework Act and evaluated using the Act’s 90:10 principle, whereby the lowest price would be the main determining factor.

The unit was damaged catastrophically in March 2014 as a result of over pressurisation of the boiler furnace, which triggered an explosion that resulted in the entire unit being shut down.

The explosion came amid serious electricity supply constraints and for some epitomised the utility’s skills deficit, as well as its shortcomings in the area of plant maintenance. The event was followed by the November 1, 2014, collapse of the Majuba coal silo, which precipitated an intense period of load-shedding.

The delay in returning the unit to service was attributed to the insurance process, which included a review and costing of various replacement solutions.

The review, Eskom said, was completed in August 2015, after which a settlement agreement was reached with insurers to replace the damaged property within a given period of time. Eskom management obtained approval for the Duvha recovery procurement strategy in December and reported in May that contractors should be on site by mid-year to begin construction.

It expected the Duvha Unit 3 to be fully recovered only during its 2019/20 financial year, however.

Previously Eskom indicated that it hoped to appoint a contractor by the end of March. However, in the statement it said the qualifying supplier had only been engaged for the negotiation phase during March and April 2016.

Eskom dismissed as “baseless” a claim that it had contracted a consultant to adjudicate the procurement process and also rejected allegations that its senior executive management was associated with procurement irregularities.

“Prior to the approval of the procurement strategy for the replacement of Duvha Unit 3, the loss adjuster had approved the FEDIC Silver Book as an appropriate contracting strategy and all costings were based on such strategy. This strategy essentially seeks to contract on a turnkey basis where potential suppliers assume all construction and interface management risks.”

Edited by Creamer Media Reporter

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