The Germany-based controlling shareholder of Hitachi Power Africa (HPA) has acquired the controversial 25% stake held in HPA by the African National Congress’s (ANC's) investment arm, Chancellor House Holdings.

The transaction, the terms and value of which were not disclosed, became effective February 1, 2014.

HPA media liaison Yash Bridgmohan told Engineering News Online that the price paid was “market related” and based on an independent evaluation, but that no values were being disclosed.

She also dismissed any direct association with the ANC, which would be contesting South Africa’s fifth democratic elections on May 7, saying HPA had no relationships with political parties and that the former shareholder and contractual partner was Chancellor House.

Hitachi Power Europe (HPE) also bought the 5% interest held by Makotulo Investments & Services, leaving it as HPA’s sole shareholder and the South African unit without any black economic-empowerment (BEE) shareholding.

Eskom was aware of the transactions, having been informed in September last year that the merger between Hitachi Limited and Mitsubishi would have an effect on HPA.

But having a BEE shareholding remained a requirement for securing Eskom contracts and Hitachi had, therefore, requested, and had been granted, a six-month grace period to regain its empowerment position.

Spokesperson Andrew Etzinger told Engineering News Online that HPA would face penalties should it fail to regain its BEE level within the period agreed, but did not provide details as to the size of the potential penalty.

Bridgmohan confirmed that HPA’s BEE status needed to be re-established and revealed that the process had started, with various options already being evaluated.

HPA and HPE were awarded the R38.5-billion boiler contracts for the giant Medupi and Kusile coal-fired power stations, which are being built in Limpopo and Mpumalanga respectively, in 2007.

Combined the contracts represented the largest awards ever made by the State-owned power utility, with about 60%, or R24-billion, of the contract value attributable directly to HPA.

There was almost immediate political and social fallout once Chancellor House’s interest in HPA became known and, in 2010, Hitachi indicated that it would entertain an offer from Chancellor House to sell its 25% interest in the company.

Bridgmohan confirmed that HPA had sought to buy the shares from Chancellor House “for a quite some time now”.

The contracts, too, have not escaped controversy, with both Medupi and Kusile running well behind schedule and over budget.

In addition, Medupi’s deferred schedule of the end of 2013 for Unit 6, had been shifted out to the “second half of 2014” as a result of boiler-weld problems, persistent labour strife and the failure of factory acceptance tests for the boiler protection component of a larger control and instrumentation package.

There were fears that even this new timeline was under threat, but outgoing Eskom CEO Brian Dames reaffirmed the late 2014 commissioning date at a briefing in February.

HPA said it had “full control” over the areas for which it was responsible and that it was managing its subcontractors to ensure that obligations were met and timeframes were not jeopardised at Medupi and Kusile.

“We are on schedule,” Bridgmohan said, adding that the rectification of the weld defects at Medupi Unit 6 had been completed.

“We are on track to finish our scope on Medupi Unit 6 for the second half of 2014. Lessons learnt were immediately taken into consideration and solutions have been implemented on the other units to avoid repetition.”