Why isn’t Eskom claiming damages from contractors?

March 3rd, 2014, Published in Articles: Energize


Why isn’t Eskom claiming liquidated damages from contractors Hitachi Africa and Alstom for the Medupi debacle? Despite an apparent lack of funds to pay for clean water, roads and other essential services, the government, in the form of the Department of Public Enterprise (DPE) shows a marked lack of interest in recovering taxpayers’ money from Medupi contractors Hitachi Africa and Alstom which have strikingly failed to perform against contracts and are manifestly late in completing the power station which is urgently needed by the country.

Late in 2013, Minister Gigaba declared “heads would roll” if Medupi was not completed on time. It hasn’t and they haven’t. Why not? Eskom is legally entitled and morally obliged on behalf of South African taxpayers to claim liquidated damages based on, among other things, that Medupi’s unit one is now at least 32 months late and commercial deployment is still uncertain, poor construction practices have led to high weld failure rates and weld safety certification issues, and boiler control systems have failed miserably to the extent that Alstom has been replaced at a late stage by Siemens to design, develop, install and commission the boiler control system.

In the meantime, the taxpaying public will continue to pay the R35-billion additional costs that Eskom could and should recover but chooses not to.

Contact Gail Day, Free Market Foundation, Tel 011 884-0270, gailday.fmf@mweb.co.za



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