Dec 05, 2007
Hitachi and Steinmüller at odds over SA boiler ‘reference' sitesBack
Alstom|Babcock Borsig|Babcock Borsig Services|Bilfinger & Berger|Deutsche Babcock|Eskom|Hitachi Ltd|Hitachi Power Africa|Hitachi Power Europe|L&C Steinmüller Group|Mail & Guardian|Steinmüller Africa|Steinmuller Construction|Germany|Japan|South Africa|Lephalale Facility|Medupi Power Plant|R78,6-billion Medupi Power Plant|Boiler Technology|Equipment Manufacturer|Installed Boiler Technology|Steel|African National Congress|Energy Division Of Babcock Borsig|Hermann Brümmer|Robin Duff|Boiler Technology|Installed Boiler |Installed Boiler Technology
© Reuse this
The dispute arose following an article published in Engineering News in which Hitachi Power Africa MD Robin Duff sought to clarify its relationship with Eskom and with Chancellor House, its 25% black economic empowerment partner, which is said to have strong ties to the ruling African National Congress.
Duff defended the relationship with Chancellor House, after leading national weekly the Mail & Guardian raised questions about whether the link played any role in the November 13 award by Eskom of a R20-billion boiler contract to a consortium comprising Hitachi Power Africa and Hitachi Power Europe (Germany). The contract for the Lephalale facility was, in fact, the biggest in Eskom's history and could well be followed by a similar sized contract for ‘Project Bravo', to be built nearly simultaneously at a site near Emalahleni, in Mpumalanga.
In his clarification, Duff noted that, while it was Hitachi Power Africa's first material contract with Eskom, the company's relationship spanned many decades, given that the installed boiler technology was now under the ownership of Hitachi.
He explained: "Through a series of mergers and acquisitions (Steinmüller was bought by Babcock Borsig in 1999 and the Energy Division of Babcock Borsig was bought by Hitachi in 2003), Hitachi Power is now the owner of all the know-how and references of the former L&C Steinmüller Group, which includes Majuba, Tutuka, Duvha and Kriel boilers, as well as the majority of the boilers installed at Sasol, which were engineered and supplied by Deutsche Babcock. Hitachi Power thus has a local boiler reference base of close to 20 000 MWe."
But this is disputed by Steinmüller Africa MD Hermann Brummer, who, in a letter to Engineering News, asserts the following: "While it is true that Hitachi Power Europe, with its subsidiary Hitachi Power Africa, a new entrant in the South African market, acquired the know-how as a result of the acquisitions referred to, ownership of know-how cannot be considered a sufficient basis for a claim of ‘references'."
Brummer stressed, too, that Steinmüller Africa has been responsible for the supply, erection and commissioning of the entire boiler island for most of Eskom's coal-fired stations. "As the original equipment manufacturer of these plants, Steinmuller Africa in fact has the ‘local boiler reference base of close to 20 000 MWe," he adds.
It was confirmed by both Brummer and Duff that there is no relationship between Hitachi Power and Steinmüller, with Hitachi Power owned by Hitachi Ltd, of Japan, and Steinmüller by Babcock Borsig Services, a subsidiary of Bilfinger & Berger, Germany.
It also emerged that Steinmüller Africa has participated in competing consortia for the Medupi contract, with Steinmuller having been part of the joint bid with Alstom, which eventually won the R13-billion turbine contract for the R78,6-billion Medupi power plant.
However, in a response to Engineering News questions Duff continued to assert that Hitachi Power Africa had a right to claim the references.
Duff elaborates: "The former L & C Steinmüller (LCS), Germany, engineered the 20 000 MW of Eskom's installed fleet in question. LCS's subsidiary, Steinmüller Africa, handled project management and local manufacture of the LCS scope. Steinmuller Construction, a subsidiary of Steinmuller Africa, did the erection of the boilers. At no time did Steinmuller Africa design any Eskom boilers and therefore is not the owner of any know-how or references."
It should be stressed, though, that Steinmüller Africa did not call into question the integrity of the Eskom tender process for Medupi, with Brummer emphasising its continued strong relations with Eskom and a desire to maintain and strengthen that relationship.
"Steinmüller recently re-established its fabrication facilities and continues to be a competitive player in the new capacity build market, while remaining committed to meeting Eskom's plant maintenance and enhancement requirements," Brummer stresses.
However, it is also interesting to note that Hitachi Power Africa selected construction and engineering group Murray & Roberts as its partner for the structural steel fabrication and erection, as well as mechanical installation works for the Medupi boiler package. Murray & Roberts has stated that the contract for the six 800-MW units are valued at about R 7-billion over a period of seven years.
Edited by: Terence Creamer© Reuse this Comment Guidelines
Other Electricity News
Updated 3 hours ago Financial services provider Rand Merchant Bank is financing a concentrated solar power (CSP) project and a biomass project awarded in round three of South Africa’s Renewable Energy Independent Power Producer Procurement Programme (REIPPPP). “This is the first...
Updated 3 hours ago The Eskom Holdings’ Board of Directors took a decision in 2004 to return three power stations, Camden, Grootvlei, and Komati, which had been mothballed in the late 1980s and early 1990s, due to the declining reserve margin and the prohibition on constructing new...
Updated 3 hours ago State-owned power utility Eskom and France-based development finance institution Agence Française de Développement (AFD) agreed in October to facilitate the signing of a €100-million credit facility agreement, which will assist in funding Eskom’s 100 MW...
Recent Research Reports
Defence 2013: A review of South Africa's defence industry (PDF Report)
Creamer Media’s 2013 Defence Report examines South Africa’s defence industry, with particular focus on the key players in the sector, the innovations that have come out of the defence sector, local and export demand, South Africa’s controversial...
Road and Rail 2013: A review of South Africa's road and rail infrastructure (PDF Report)
Creamer Media’s Road and Rail 2013 Report examines South Africa’s road and rail transport system, with particular focus on the size and state of the country’s road and rail network, the funding and maintenance of these respective networks, and the push to move...
Liquid Fuels 2013 (PDF Report)
Creamer Media’s 2013 Liquid Fuels report examines South Africa’s liquid fuels market, focusing on the business environment, oil and gas exploration, the country’s feedstock supplies, the development of South Africa’s biofuels industry, fuel pricing,...
Projects in Progress - Second Edition (PDF Report)
Creamer Media’s second Projects in Progress supplement considers some of the major project developments under way, including high-profile energy and transport projects, as well as a few of the lower-profile public and private developments. What remains apparent is...
Water 2013: A review of South Africa’s water sector (PDF Report)
Creamer Media’s Water 2013 report considers the aforementioned issues, not only in the South African context, but also in the African and global context, and examines the issues of water and sanitation, water quality and the demand for water, among others.
Canadian Mining Roundup for June 2013 (PDF Report)
The June 2013 roundup includes details of the development of TSX-V-listed Aldridge Minerals’ flagship Yenipazar polymetallic project, in Turkey; the Canadian Nuclear Safety Commission’s renewal of Cameco’s uranium mining licence pertaining to the Cigar Lake...
This Week's Magazine
Updated 3 hours ago Johannesburg-based locomotive solutions provider DCD Rolling Stock officially launched Phase 1 of its R240-million recapitalisation programme at its Boksburg manufacturing facility, last month.
Updated 3 hours ago Sales of electric cars should pick up once more such vehicles become available on the South African market, says Nissan South Africa (SA) chief marketing manager Ross Garvie. The local arm of the Japanese car company launched the country’s first fully electric...
Updated 3 hours ago Denel Land Systems’ (DLS) Mechem division is successfully marketing the latest version of its highly regarded Casspir mine-protected vehicle, the Casspir NG2000 series wide body ambulance. As its description says, this has a notably wider body than standard...
Updated 3 hours ago The infrastructure boom in Africa has seen investment in 322 megaprojects reach $222.7-billion, says professional services firm Deloitte in its ‘African Construction Trends’ report. Deloitte Southern Africa infrastructure and capital projects leader André Pottas...
Updated 3 hours ago ASME, the international engineering profession’s cooperative, educational and training, research, outreach and codes and standards development organisation (originally the American Society for Mechanical Engineers, founded in 1880), is seeking to improve the...