[ad_1]
Andre de Ruyter, CEO of Eskom.
Gallo Images / Business Day / Freddy Mavunda
- Eskom’s Kusile power plant contractor ABB South Africa will pay the utility R1.56 billion as part of a deal.
- This comes after the Special Investigation Unit launched an investigation in 2018, and is the largest recovery to date.
- Eskom CEO Andre De Ruyter says that some R3 billion in irregular expenses incurred at Kusile still need to be recovered.
Eskom’s Kusile power plant contractor, ABB South Africa, will pay the utility R1.56 billion as part of a deal.
Officials from Eskom and the Special Investigation Unit made the announcement in a briefing on Friday.
The amount refers to the overpayments made by Eskom to the contractor in the construction of the Kusile power plant. Fin24 previously reported that ABB South Africa was among three other contractors: Stefanutti Stocks, Basil Read Joint Venture and Tubular Construction Projects, which benefited from more than R4 billion in overpayments on the construction of the power plant.
Kusile is part of the newly built coal power plant project in Eskom, which was launched together with Medupi in 2007; It has suffered from delays, cost overruns running into the billions and design flaws. The Kusile and Medupi power plants were due to be completed in 2015. Eskom CEO Andre De Ruyter has said that design flaws are being addressed and Medupi could be fully operational by the end of the first quarter of 2021.
In Friday’s briefing, SIU attorney Andy Mothibi said the settlement was the largest recovered to date. It comes after a lengthy investigation, which arose after ABB South Africa voluntarily disclosed alleged collusion with certain Eskom officials to irregularly award it R2.2 billion for a control and instrumentation contract for Kusile in 2015. In the session informative, De Ruyter explained that ABB has For many years provided Eskom with a variety of control systems in all its generation, transmission and distribution systems. In this case, ABB was providing what could be considered “the brain” of the Kusile power plant.
The settlement agreement will be subject to review by a higher court.
De Ruyter explained that the amount is made up of 800 million rand for irregular modification orders, 50 million rand is attributed to the irregular award of the contract through collusion with Eskom officials, 380 million rand relates to interest on the money. irregularly paid and R 160 million relate to accrued earnings to ABB South Africa.
De Ruyter said that another R3 billion in irregular expenses incurred at Kusile is estimated to have yet to be recovered.
Completed work
De Ruyter said construction at Kusile was 90% complete, and Eskom will approach the National Treasury to allow ABB to complete the rest of the work, with no profit. He said it would be costly to switch to a new contractor and delay Kusile’s startup for another four years. Finding a new contractor also ran the risk of claims from other contractors, as well as loss of cargo.
Two former Eskom executives have also appeared in court and are being prosecuted in connection with irregularities in ABB’s contract.
Criminal investigations are still ongoing and no arrests have yet been made – SIU and Eskom were reluctant to provide the names of the officials under investigation.
Commenting on the developments, the Minister of Public Enterprises said there are tens of billions more to recover from irregular contracts with state companies. He also said that companies involved in illicit acts must come forward, otherwise the SIU will inevitably find them.
So far, in reviewing contracts, to recoup losses from wrongdoing, Eskom has managed to recover R1.1 billion from McKinsey and R171 million from Deloitte Consulting.
It is also pursuing a R3.8 billion civil lawsuit from various former officials, board members and members of the Gupta family and a R95 million lawsuit against PwC, it said in a separate statement issued Friday.
