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 Regulation News
Article contains comments
Recent Research Reports
Steel 2014: A review of South Africa's steel sector (PDF Report)
Creamer Media’s Steel 2014 report provides an overview of the global steel industry and particularly of South Africa’s steel sector over the past year, including details of production and consumption, as well as the country's primary carbon steel and stainless...
Projects in Progress 2014 - First Edition (PDF Report)
This publication contains insight into progress at the delayed Medupi and Kusile coal-fired projects, in Mpumalanga and Limpopo respectively, as well as at the Ingula pumped-storage scheme, which is under construction on the border between the Free State and...
Automotive 2014: A review of South Africa's automotive sector (PDF Report)
The report provides insight into the business environment, the key participants in the sector, local construction demand, geographic diversification, competition within the sector, corporate activity, skills, safety, environmental considerations and the challenges...
Construction 2014: A review of South Africa's construction sector (PDF Report)
Construction data released during 2013 hints at a halt to the decline in the industry during the last few years, with some commentators averring that the industry could be poised for recovery. However, others have urged caution, noting that the prospects for a...
Electricity 2014: A Review of South Africa's Electricity Sector (PDF Report)
This report provides an overview of the state of electricity generation and transmission in South Africa and examines electricity planning, investment in generation capacity, electricity tariffs, the role of independent power producers and demand-focused initiatives,...
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...
This Week's Magazine
The Electronic Systems Laboratory (ESL) of the Department of Electrical and Electronic Engineering at Stellenbosch University is strongly reaffirming its position as one of South Africa’s leading centres for satellite technology and expertise. It is currently...
The world’s lowest-cost diesel-electric locomotive is not made in China, but in Pretoria, at RRL Grindrod Locomotives’ newly upgraded 30 000 m2 plant. The company’s locomotive pricing is “more competitive than any other original-equipment manufacturer (OEM)...
The South African Defence Review 2012, released to the public at the end of last month (despite the year given in its title) recommends the creation of the post of Chief Defence Scientist. This official would be responsible for the management of defence technology...
AltX-listed engineering technology company Ansys has been awarded an R188-million contract by Transnet to supply integrated dashboard display systems to the freight rail utility’s locomotives. Black-owned and controlled Ansys developed the bespoke integrated system...
South Africa’s sole nuclear power station Koeberg, which is located in the Western Cape, breached a major operations milestone on April 4, which marked the thirtieth anniversary of Unit 1 having been connected to the grid. Eskom, which operates the two-unit plant,...