Late last month, leading national weekly Mail & Guardian exposed the fact that Chancellor House had a 25% stake in Hitachi Power Africa, which, together with Hitachi Power Europe (Germany), was awarded the biggest contract in Eskom’s history on November 13.
The R20-billion contract is for six 800-MW utility steam generators for the Medupi power station, which is being built at a cost of R78,6-billion, at a site near Lephalale, in Limpopo province. The consortium is also in line to supply a similar offering for the R80-billion-plus Project Bravo, which is to be built almost simultaneously at a site near Emalahleni, in Mpumalanga. This tender should be awarded before the end of the month.
In a reply to emailed questions, Hitachi Power Africa MD Robin Duff told Engineering News that the relationship with Chancellor House was developed in a bid to deepen its “local knowledge” and that Chancellor House had paid cash for its shares. Duff refused to comment on the value of the payment, describing it as “proprietary information”.
Duff acknowledged that it was aware that Chancellor House has political connections when concluding the black economic-empowerment transaction, but asserted that this was the case “with most other empowerment entities”. He revealed that Chancellor House’s T M Mokoena was a director of Hitachi Power Africa, with M Net-sianda as an alternate director.
Stressed, too, was Chancellor House’s advisory role and the fact that it played no direct role in negotiations with Eskom for a recent contract. “Their role is as investor and adviser on local issues such as skills development, empowerment, and socioeconomic initiatives,” Duff elaborated.
Also placed into context was the long-standing historical relationship between Eskom and the under- lying companies, which currently fall under Hitachi Power Africa.
Through a series of mergers and acquisitions, which saw Steinmuller bought by Babcock Borsig in 1999 and the energy division then sold to Hitachi in 2003, Hitachi Power was the current owner of all the know-how and South African references of the former L&C Steinmuller group.
This included boiler installations at the Majuba, Tutuka, Duvha and Kriel power stations, as well as the majority of the boilers installed at petrochemicals group Sasol, which were engineered and supplied by Deutsche Babcock.
“Hitachi Power thus has a local boiler reference base of close to 20 000 MW. We never lost touch with Eskom and discussions about Eskom’s expansion plans have been ongoing since 2004,” Duff explained, asserting, too, that Hitachi Power Europe currently ranked among the three leading suppliers of utility boilers internationally.
Duff stressed, too, that Hitachi was a strong supporter of Eskom’s aspiration to build local manufacturing capacity around its big build programme, which already involved a pipeline of work worth R300-billion, and that the group would invest in new manufacturing facilities.
This investment would include facilities to produce boiler pressure parts, tube bundles, ducting and coal bunkers and piping. It would also involve the procurement of large cranes, the creation of apprentice training centres and other enterprise development initiatives.
“Planning for the major investments is advanced and will be implemented as from 2008,” he concluded.
Several attempts to garner comment from Eskom proved unsuccessful.