State-owned electricity utility Eskom announced on Wednesday that new labour agreements have been finalised with contractors and unions at the strike-prone Medupi and Kusile power-station sites in a bid to stabilise industrial relations and ensure that the projects meet their already revised delivery schedules. Eskom had initially hoped to finalise the new agreement by the end of May.

The Medupi project, in Lephalale, has been particularly affected by labour unrest with much of the unhappiness stemming from the previous project labour agreement (PLA), which reportedly led to inconsistencies in the treatment of workers on the site.

The project, which is seen as critical to closing South Africa’s prevailing power-system shortfalls, was closed for 10 weeks earlier this year owing to unrest and reopened only following direct intervention by Public Enterprises Minister Malusi Gigaba.

Eskom announced that, following an extensive engagement process, a new partnership agreement had been finalised and would, ultimately, replace the much-maligned PLAs on the two sites.

Negotiations, which were facilitated by mediators, involved senior executives from Eskom and the contractors, as well as top officials for the seven unions representing project workers.

Eskom’s FD Paul O’Flaherty, who has been instrumental in the negotiations, described the new agreement as a “milestone”. He said Eskom was taking a more active role in managing labour relations by working with employers and labour to ensure fair treatment, improved productivity and a focus on delivery.

The agreement has been signed by Eskom, the contractors and organised labour – only contractors and labour were signatories to the previous PLAs.

New, site-specific agreements will now be crafted in line with agreed principles, which include:

• A minimum wage for all hourly-paid contractor employees.
• Standardised and consistent pay rates within each company, across companies and within the same industries.
• The creation of a new central-wage bureau to aid standardisation.
• And, the appointment of a task team to address the relevant skills development and training needs for employees and employers on site.

Implementation processes have also been agreed and partnership forums will be set up to resolve “outstanding substantive issues”. However, existing industry forums and bargaining structures remain in place.

Power from Medupi’s first unit, or Unit 6, is anticipated by December and the 4 764 MW facility is scheduled to be completed in 2016. Production from the 4 800 MW Kusile project’s first unit is expected in 2014, with the five subsequent units being completed at six- to eight-month intervals thereafter.

Eskom is investing R91.2-billion to build Medupi, R118.5-billion on Kusile and a further R25.9-billion to complete the Ingula pumped-storage scheme, in KwaZulu-Natal. Collectively the projects are expected to create 35 500 direct jobs and about 124 500 indirect jobs.