As a result of this projected water shortage, in November 2004 the Minister of Water Affairs and Forestry Buyelwa Sonjica, initiated the emergency Vaal River Eastern Sub-system Augmentation Project (Vresap) to supplement the water requirements of the Eskom power stations and Sasol until 2030.
From the results of the prefeasibility study that was completed in 2004, it was clear that the only feasible option to meet these water de- mands would be a water pipeline conveyance system directly from the Vaal dam through the Knoppiesfontein diversion structure to the Bosjesspruit and Trichardtsfontein dams.
Thus, the Vresap scheme entails the construction of a 115-km-long water pipeline from the point of extraction at the Vaal dam in order to transfer 160-million m3 of water a year to the discharge point near Secunda, by October 2007.
The abstraction point will be from the Vaal dam near Vaal Marina, comprising a low-lift pump station and desilting works, and a high-lift pump station, and the delivery point will be situated at the modified Knoppiesfontein diversion structure, which diverts the water into the Bosjesspruit dam and Trichardtsfontein dam.
There are two sections of the pipeline: the first half consisting of the section between the Vaal dam and Greylingstad, which predominantly cuts through private farmland, and the second half consisting of the section between Greylingstad and Charl Cilliers, which cuts through Mpumalanga coal deposits.
In order to effectively execute the project, the Minister mandated State-owned water-resource entity TCTA to implement and fund Vresap as the agent for the Department of Water Affairs and Forestry (Dwaf).
In an interview with Engineering News, TCTA project manager Tim Staples explains that this directive was given to TCTA as it was decided to fund the project off-budget so that exchequer funds could be better applied to meeting other needs of the country.
“Because the Vresap project is off-budget, TCTA is the vehicle that is being used to provide the funding and to carry out project-management until the completion of the project.
“In addition, TCTA’s role in the project means that we will be able to further leverage expertise in the liability management of bulk raw water and project implementation in the interests of contributing to the broader economic objectives of the country.” After the delivery of this mandate on November 26, 2004, TCTA secured the bridging finance for the first 12 months of the project and, thereafter, will procure long-term financing.
The signing of the Water Supply and Payment agreements between Eskom and Sasol, the major project beneficiaries, with Dwaf, together with the signing of the Implementation Agreement between TCTA and Dwaf, has paved the way for the off-budget, long-term project financing of Vresap.
The capital cost of the project is valued at R2,5-billion but, with the inclusion of all the financial costs, the overall cost of Vresap is R3,3-billion.
Although Vresap is a government project, it will be funded through the private sector and all debt will be repaid over 20 years through the revenue stream generated by the sale of bulk water to Eskom and Sasol.
However, with regard to the short-term financing of Vresap, on October 7, this year, TCTA successfully concluded bridging facilities worth R600-million, from four main South African financial institutions. According to Brett Botha of Nedbank’s public and infrastructure project finance division, of the R600-million bridging finance required by TCTA, Nedbank has made R300-million available for the interim period. The balance of the funding was allocated between Investec Bank, Standard Bank and Absa Bank, which each granted R100-million of the facility.
“The funding will be used by TCTA to finance costs such as administrative expenses, consult-ancy fees, advance payments on contracts awarded and other project costs until TCTA is in a position to refinance the bridging facilities with longer-term debt,” explains Botha.
In terms of securing long-term financing for Vresap, TCTA received its credit rating from Fitch Credit Rating Services at the beginning of November.
“Vresap achieved an AA+ credit rating, which is, internationally, the highest rating that has ever been given by Fitch as a national project rating,” Staples tells Engineering News.
“Vresap therefore matches the only other project with a AA+ rating, which is TCTA’s Berg Water project.
“On the strength of this rating, we are able to get the most competitive rates in the market to fund the project, which has significant benefits for the end-users, because the cheaper the finances, the cheaper the total project cost is in the end.” Funding proposals for the long-term financing of Vresap have been submitted to TCTA and it is expected that this funding will be secured by the end of the year.
Environmental impact report Once the bridging finance had been secured by TCTA, the next fundamental step was to award the contract for the environmental impact assessment (EIA).
Consequently, the contract was awarded to Strategic Environmental Focus (Sef) in April this year.
In an interview with Engineering News, the manager of Sef’s environmental impact assessment unit, Reuben Heydenrych, explains that, because of the emergency nature of the project, the EIA had to be fast-tracked and completed within six months instead of the usual period of 12 to 18 months for an EIA.
“We were required to obtain a record of decision by August, which meant that we had to submit our EIA by the beginning of July,” says Heydenrych.
“The way we were able to meet this deadline was to obtain exemption from completing a scoping study for the Department of Environ-mental Affairs and Tourism (Deat).” Heydenrych contends that this is the first time that Deat has exempted an EIA consultant from the requirement of doing scoping work before proceeding to a full EIA.
One of the main contributing factors in obtaining a record of decision within four months was the excellent cooperation that was acheived between the national and provincial environ-mental authorities.
In the EIA a number of specialist studies were conducted by Sef including archaeological, fauna and flora, air pollution and noise studies, as well as social impact and aquatic assessments.
From these studies, six key risks and issues were identified by Sef in the environmental impact report (EIR).
Fundamentally, the EIR acknowledged that, as the first section of the pipeline cuts through private farm land, the construction of the pipeline will have a significant disruptive impact on farming activities.
The report states that it is critical that compensation for loss of production is properly dealt with through individual consultations with farmers and that the environmental management plan must ensure that soil is properly rehabilitated so that agricultural production can continue once construction is completed.
In addition, apart from water points that farmers can apply for, there will be no immediate benefit from the pipeline to local inhabitants.
Farmers were also concerned that the influx of construction workers would impact on their own safety and on their livestock but measures are being implemented to ensure that these security concerns are properly addressed.
Another issue that is dealt with in the report is the impact on archae-ological and other heritage sites.
There are two Iron Age archaeo-logical sites which have successfully been avoided with the slight rerouting of the pipeline.
The impact on graves situated close to the pipeline route is also a concern to residents and farmers and it has been proposed that these graves be exhumed and reburied as is the requirements of the National Heritage Resources Act.
With regard to the impact on the level of the Vaal dam at the Vaal Marina, residents are concerned that the level of the dam would drop significantly owing to water abstraction from the dam.
However, when compared to the abstraction of Rand Water and the natural and artificial inflows to the dam, the abstraction of the proposed pipeline is insignificantly small.
Finally, the report explains that the koppie where the low-lift pump station is to be located is the most ecologically-sensitive site along the entire route, owing to the presence of six protected plant species.
Although a number of alternatives were explored, these impacts cannot be completely avoided and the report explains that, in view of the limited technical alternatives that are available and the depth of the ecological investigation that was undertaken, the impact of the abstraction works would not be so critical that it should be considered a fatal flaw.
However, in conclusion, the report states that the construction of the Vresap pipeline could have negative impacts on the biophysical and social environments but, if duly mitigated and planned, the project will enhance the economic potential of the benefiting region, while impacting minimally on the affected environment.
According to Heydenrych, the most fundamental aspect of the early stages of the Vresap project was the fact that the EIA and the design of the pipeline and pumping were done simultaneously, owing to time constraints. “The significance of this is that the engineers were able to take into consideration the findings of the EIA while designing the pipeline, thereby minimising the impact on the surrounding environment,” says Heydenrych.
There are four main contracts that comprise the Vresap project: V001 and V002, which are the two main engineering contracts, and V020 and V021, which are the two main construction contracts. Both the V001 and V002 contracts, valued at R150-million, were awarded in December last year to a Gauteng-based consortium and Dwaf, respectively.
The V001 contract for the civil works and the pipeline was awarded to Vaal Pipeline Consultants (VPC), comprising Goba, PD Naidoo and Associates and Ninham Shand. According to VPC project manager Paul le Roux, the scope of services being provided by VPC includes engineering design and other specialist services required to define, develop and manage the design and to monitor the construction of the Vresap components and asso-ciated infrastructure.
“Our mandate during the design stage required the detailed design and preparation of tender documentation of various components of the project, including the abstraction works, pump stations, pipelines, desilting works, and general infrastructure,” Le Roux tells Engineering News.
“During the construction stage, VPC’s responsibilities will include the preparation of construction drawings during the monitoring of the construction contracts. “In addition to the traditional roles described above, VPC has also been appointed to fulfil the role of TCTA’s agent, responsible for the administration, integration and coordination of the mechanical and electrical services for the pro-ject.” The mechanical and electrical design services under the V002 contract are being provided by Dwaf under a separate appointment by TCTA.
Because the Mechanical/Electri-cal Engineering Directorate (DMEE) of Dwaf has more than 30 years experience in the building of large pump stations, it was accordingly requested by TCTA to provide engineering and other specialist services to define, develop and manage the design and to supervise the construction of the Vresap components and infrastructure, which is broadly referred to as mechanical, electrical, instrumentation and piping (MEIP).
The scope of work included the mechanical and electrical install-ations of the abstraction works, diversion structure and the pump stations, the power supply requirements for the project, the electronic/ control works of the project, and the security of the project.
Although DMEE started the work in December 2004 as part of Dwaf it will probably conclude its contractual obligations in October 2008, which includes the one-year guarantee period, as part of the agency as defined by Parliament in July 2005. For the project, the DMEE team consists of 15 engineers and 15 technicians, all in the mechanical, electrical and electronic disciplines. In terms of the construction contracts, the V020 contract for the pipeline supply and installation was awarded to the Mpumalanga Pipeline Contractors (MPC) joint venture on October 19, this year. The critical path with respect to the short construction period meant that the combined production capacity and expertise of Hall Longmore and Group Five Pipe needed to be used for the manu- facture of piping and The Rare Group for the supply of pipe fittings and logistical support. The Vulindlela Vresap Pipeline joint venture was formed by these three companies, which successfully tendered to the MPC joint venture for the project.
The MPC joint venture includes Murray & Roberts Construction, Group Five Construction, WK Construction and the J&J Group.
According to MPC project director Andrew Howcroft, the scope of the V020 contract includes the supply, installation and testing of the 1,9 m diameter steel water- supply pipeline.
“Murray & Roberts Construction and Group Five have extensive experience in heavy earthworks excavation and backfill, while WK Pipelines is considered to be one of the leading pipeline installation contractors in South Africa,” says Howcroft.
At the time of going to press, the letter of acceptance was issued by TCTA to the Covec-MC joint venture for the R425-million V021 contract for the construction of civil structures, and mechanical and electrical instrumentation.
The Coven-MC joint venture comprises the Chinese Overseas Engi-neering Corporation and black-empowered Mathe’s Construction, which have a 75% and 25% stake, respectively.
BEE participation and local procurement
A significant factor affecting the Vresap project is the socio-econo-mic targets that the contractors are required to achieve during the implementation of the project.
Staples explains that, because of TCTA’s links with government, the company needs to facilitate the involvement of black economic-empowerment (BEE) and local companies as far as possible in order to help government achieve its broader socio-economic objectives.
“As a result, we have set targets in our contracts to ensure that we have sufficient involvement and procurement from BEE and local com- panies,” says Staples.
“In addition, because we are ahead of the publication of the Construction Charter, which is expected in January, we have had to take the initiative and set our own targets for the contracts.” Staples adds that the overall target for BEE participation in all the contracts is 25%.
Similarly, the target for procurement is 25%, which includes small, medium, and microenterprises (SMMEs), BEE and local suppliers, combined.
It is anticipated that the involvement of local companies will help to boost job creation in Gauteng and Mpumalanga.
Job creation and skills development
The construction of the Vresap project is expected to generate about 750 job opportunities for local residents, while the project will create 20 permanent jobs in its operational phase.
Interestingly, it is anticipated that this project will include a provision for the development of women entrepreneurs in construction.
According to South African Federation of Civil Engineering Contractors (Safcec) empower- ment manager Michele Gilbert, a proposal to implement a Safcec and South African Women in Construction (Sawic) joint venture to develop women entrepreneurs on the Vresap project is supported by TCTA.
The development of the women will include business management training and monitoring on site.
The Development Fund from the Development Bank of Southern Africa has provided the funds to support this programme. Gilbert explains that a memorandum of understanding has been signed between Safcec and Sawic to engage in the project and develop 20 previously-disadvantaged women entrepreneurs, but the final decision regarding the proposal is only expected early next year.
Apart from the possible inclusion of women, skills development of the local workforce is a factor that will influence the project.
According to Howcroft, prior to the starting date of the V020 contract, the MPC had already started training welders.
“Skills is a big component of this contract and, as a result, we have to include sufficient recruiting and training policies to ensure that the potential skills shortage does not impact on the project,” says Howcroft.
However, Staples contends that a shortage of skills will not be evident in the Vresap project.
“We are fortunate in that we are ahead of some of the big developments that are coming, which will certainly induce a skills shortage in the future,” says Staples.
“We are probably going to be fine in the Vresap project but the contractors need to be aware of what is happening and introduce contingency plans so that, should the skills that they do have start moving into other projects, there will be a replacement pool of skills.”
Challenges and project overview
Because Vresap is a fast-track pro-ject, the most significant challenge that is confronting all parties is following the tight timeframe of the project.
In addition, because many of the items that will be used in this project have long lead times, the logistics of the project will also pose a significant challenge to contractors. The completion of the project is anticipated to be October 17, 2007, and, for every day that contractors run over schedule, a penalty of R500 000 will be charged to each contractor. “It is in the interest of the country that this project is executed on time,” explains Staples. “If the contractors are late, there will not be enough water for Eskom to continue its ‘return-to-service’ programme and for Sasol to increase fuel production.” However, overall, Staples is upbeat about the execution of the project.
“At this stage, we are on target and are ahead of the emergency predicted date of when the area will run out of water by three months.” In conclusion, Staples adds that what has been achieved within this past year has been nothing short of excellent.
“Within this period, we received our record of decision, we completed concept design, tender design, tendering and have awarded all of the construction contracts.
“The success of the project to date, given the tight programme, has been the result of good cooperation between government departments, TCTA, the consultants, and the contractors, which is expected to continue as we build on these relationships into 2006/7,” concludes Staples.