Has the Kusile contract been scaled down?

Has the Kusile contract been scaled down?

Eskom has downlplayed allegations that the contract of its ‘execution partner’ at its Kusile power project has been scaled down in favour of the Indian company Tata.

US-based engineering group Black & Veatch (B&V) designed Kusile, but also plays a much wider role at the project which is the first power station in South Africa to use advanced environmental flue gas desulfurisation air quality control technology and air-cooled condensers.

B&V describes its own role as providing ”construction management, planning, engineering and design, contracts, claims and procurement management, and health and safety management services in a partnership arrangement with Eskom professionals.”

Moneyweb saod that until around September, B&V had 40 to 50 staff members at Eskom’s Megawatt Park head office and about 200 on site at Kusile. It is now said that this has been scaled down to a total of about 140.

According to information on its website, B&V has delivered 59,000MW of generation capacity since the 1950s. Two other independent sources have confirmed that B&V’s presence has been downscaled.

B&V did not respond to specific questions from Moneyweb, but said it has 135 site-based employees at Kusile.

The company did say it “continues to provide engineering, training and construction management services” at Kusile. However it continues: “Working with Eskom it has been the projects’ plan to reduce the size of our site-based workforce as Eskom’s professionals assumed a larger role in the project’s execution.”

Eskom said B&V’s role is unchanged. It also said, “The downscaling of Black & Veatch is as per agreed principles of once the work is complete where they are involved, the demobilisation process will take place.” The utility did not confirm or deny whether any such demobilisation has taken place to date.

Eskom did however in November extend the expected date of synchronisation of Kusile’s first unit once again. It is only now expected by November 2017. This is about six months later than the deadline it communicated in its integrated report dated March 2015. A year before, Eskom had promised synchronisation by the end of 2015.

Eskom never gave much of an explanation for these extensions and the projected cost to completion has not been adjusted accordingly.

One source maintains the target date of 2022 for the completion of the last unit is unrealistic in the light of the earlier cancellation of the contract for the control system with Alstom. It was thereafter awarded to ABB, which now has to redesign the whole system that consists of about 750km of cables.

The on-site sources told Moneyweb that B&V engineers are extremely frustrated by the active role of Eskom as a client, which they said has limited the space for B&V to “do what we have to do.”

Moneyweb has been told that Eskom’s processes are “the slowest in the world” and the partnership agreement between Eskom, contractors and the labour force is making it almost impossible to fire unproductive workers.

B&V schedulers allegedly warned Eskom in 2012 that the first unit would only be synchronised by 2017, but Eskom only recently adjusted its public schedule accordingly.

In response to this allegation, Eskom said B&V is part of the Kusile execution team and all operational decisions made by the project are binding to the project teams.



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