http://www.engineeringnews.co.za
  SEARCH
Login
R/€ = 13.14Change: -0.15
R/$ = 12.05Change: -0.20
Au 1200.03 $/ozChange: -6.12
Pt 1139.50 $/ozChange: -16.00
 
 
Note: Search is limited to the most recent 250 articles. Set date range to access earlier articles.
Where? With... When?








Start
 
End
 
 
And must exclude these words...
Close Main Search
Close Main Login
My Profile News Alerts Newsletters Logout Close Main Profile
 
Agriculture   Automotive   Chemicals   Competition Policy   Construction   Defence   Economy   Electricity   Energy   Environment   ICT   Metals   Mining   Science and Technology   Services   Trade   Transport & Logistics   Water  
What's On Press Office Tenders Suppliers Directory Research Jobs Announcements Letters Contact Us
 
 
 
RSS Feed
Article   Comments   Other News   Research   Magazine  
 
 
Jun 29, 2012

M&R says Medupi ‘derisked’ following Eskom agreement

Back
Construction|Engineering|Civils|CoAL|Coal-fired Power Station|Contractor|Eskom|Flow|Hitachi|Murray|PROJECT|Projects|Medupi Power Station|Flow|Power Station Project Site|Henry Laas|Power
Construction|Engineering|Civils|CoAL|Coal-fired Power Station|Contractor|Eskom|Flow|PROJECT|Projects||Flow||Power
construction|engineering|civils|coal|coalfired-power-station|contractor|eskom|flow-company|hitachi|murray-company|project|projects|medupi-power-station|flow-industry-term|power-station-project-site|henry-laas|power
© Reuse this



Construction group Murray & Roberts (M&R) says the risks associated with its Eskom-related projects have been dealt with after it reached an ‘in-principle agreement’ with the State-owned power utility relating to variation orders, time extensions and the remaining scope of the civil engineering works at the Medupi power station project site, in Lephalale.

CE Henry Laas told investors on Friday that the agreement dealt with all historical claims and, more importantly, defined the scope and value of the remaining works, now estimated at around R3-billion. The full value of the contract was estimated at around R8-billion for the M&R-led civils joint venture, which also included Aveng.

The high-level settlement still had to be signed off by the Eskom board, but Laas said he did not foresee any problems related to the clearing of that governance hurdle.

The solution, together with a deal concluded with Hitachi in the first half of 2011, meant that M&R no longer perceived the Medupi-related orders to represent ‘problem contracts’.

The JSE-listed contractor is also the mechanical works subcontractor for the multibillion-rand boiler contract, awarded to Hitachi in 2007. The contract value to M&R was estimated at around R18-billion, with about R5-billion having been executed.

“The relationship with Hitachi really changed in June last year, when we came to an agreement on the way forward. Since then, progress on the Medupi site has improved materially,” Laas told Engineering News Online during a recent interview on the Medupi site.

He also indicated that the progress achieved with both Hitachi and Eskom was enabling the contractors to “claw back” some of the time lost during the earlier phases.

Nevertheless, Eskom was still forecasting output from the first unit at the R91-billion, six-unit project towards the end of 2013. The coal-fired power station, with a final nameplate capacity of 4 764 MW, would be ramped up to full capacity by 2017.

“The relationship is now such that the parties are working together and they are delivering the project, “Laas said, adding that he did not anticipate any costs to M&R as a result of a ‘flow through’ claim by Aveng’s DSE against Hitachi.

Financially, the arrangements were such that M&R was recovering all costs related to the Hitachi subcontract, while it had the potential to earn a profit based on performance.

“There was no profit for us up to the end of June 2011. But as from July onwards, the arrangement is working well for us and we expect to earn a profit of between 5% and 7.5%.”

On the civils side, the group also expected to secure margins within the 5% to 7.5% range following the settlement.

“There is clear definition of what we need to do, we are all in agreement on the programme, we are also in agreement on the cost and the value to complete the project.

“This has effectively derisked the project to a large extent,” Laas explained, adding that in the absence of the agreement, the issued would have probably moved into arbitration.

Edited by: Creamer Media Reporter
© Reuse this Comment Guidelines (150 word limit)
 
 
 
 
 
 
 
 
 
Latest News
Updated 1 hour 11 minutes ago Top aluminium producer United Company Rusal will start producing metal at its Boguchansk project, in Russia, by June and will ramp up output over the following year depending on demand, the company's chief executive said on Monday. Weak aluminium prices are forcing...
Updated 1 hour 14 minutes ago Dubal Holding, the holding company for Dubai's stake in Emirates Global Aluminium and other assets, is considering possible acquisitions in local and international energy projects, it said on Monday. The firm was looking for equity interests related to coal, solar,...
South African mining and energy adviser Ted Blom has raised a litany of concerns about the state of power utility Eskom and has warned of runaway costs and shortfalls in coal and water, as well as rail capacity. Blom was surprised by the recent buoyancy shown by...
More
 
 
Recent Research Reports
Steel 2015: A review of South Africa's steel sector (PDF Report)
Creamer Media’s Steel 2015 report provides an overview of the key developments in 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...
Projects in Progress 2015 - First Edition (PDF Report)
In fact, this edition of Creamer Media’s Projects in Progress 2015 supplement tracks developments taking place under the Renewable Energy Independent Power Producer Procurement Programme, which has had four bidding rounds. It appears to remain a shining light on the...
Electricity 2015: A review of South Africa's electricity sector (PDF Report)
Creamer Media’s Electricity 2015 report provides an overview of State-owned power utility Eskom and independent power producers, as well as electricity planning, transmission, distribution and the theft thereof, besides other issues.
Construction 2015: A review of South Africa’s construction sector (PDF Report)
Creamer Media’s Construction 2015 Report examines South Africa’s construction industry over the past 12 months. The report provides insight into the business environment; the key participants in the sector; local construction demand; geographic diversification;...
Liquid Fuels 2014 - A review of South Africa's Liquid Fuels sector (PDF Report)
Creamer Media’s Liquid Fuels 2014 Report examines these issues, focusing on the business environment, oil and gas exploration, the country’s feedstock supplies, the development of South Africa’s biofuels industry, fuel pricing, competition in the sector, the...
Water 2014: A review of South Africa's water sector (PDF Report)
Creamer Media’s Water 2014 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.
 
 
 
 
 
This Week's Magazine
Sappi Southern Africa CEO Alex Thiel
Forest products group Sappi has confirmed the selection of its 25 MW biomass-to-power project, to be erected at its Ngodwana mill, in Mpumalanga, as a preferred bidder under the South African government’s Renewable Energy Independent Power Producer Procurement...
Information and communications technology (ICT) distributor DCC is making Windows- and Android-operating systems tablets available through retailers and education equipment suppliers to provide school children with affordable, high-performance education tools. The...
Another cement manufacturer is set to enter the Ugandan market, raising hopes that prices will come down and spur growth in the construction industry. National Cement, a Kenyan manufacturer, has unveiled plans to invest $195-million in a new manufacturing plant in...
With growth rates exceeding that in the developed world – at an average of between 4% and 5% between 2002 and 2014 – African countries provide investors with ample reason to tap into booming consumer demand says Manufacturing Circle executive director Coenraad...
The South African Chamber of Commerce and Industry’s (Sacci’s) Business Confidence Index (BCI) decreased by 3.7 index points month-on-month to 89.1 in March.
 
 
 
 
 
 
 
 
 
Alert Close
Embed Code Close
content
Research Reports Close
Research Reports are a product of the
Research Channel Africa. Reports can be bought individually or you can gain full access to all reports as part of a Research Channel Africa subscription.
Find Out More Buy Report
 
 
Close
Engineering News
Completely Re-Engineered
Experience it now. Click here
*website to launch in a few weeks
Subscribe Now for $96 Close
Subscribe Now for $96