Medupi and Kusile tenders were corrupt from day one – Expert

Government corruption has resulted in massive issues at the Medupi and Kusile power plants.

This is according to energy expert Ted Blom, who was speaking in an interview with Jacaranda FM.

“The tender contracts for Medupi and Kusile were corrupt from day one. The adjudicating parties at Eskom swapped the tender offers,” Blom said.

“Hitachi tendered for the turbines and are well-known worldwide for turbine execution, while Alstom tendered for the boilers.”

“The powers that be at Eskom swapped the tender offers and Hitachi ended up with what they didn’t tender for – the boilers – and Alstom ended up with the turbines.”

Corrupt tenders

Blom claimed these two tenders were switched because the government wanted to give Hitachi the larger contract.

The ANC’s investment company, Chancellor House, owned shares in Hitachi Power Africa (HPA), having bought them for R1.25 million in 2005.

Chancellor House sold these shares for R50 million in 2014 after HPA was awarded the R40-billion boiler contract for Medupi and Kusile.

In 2008, the Public Protector found the awarding of the tenders by Eskom to HPA had created a conflict of interest because Valli Moosa, Eskom’s chair at the time, was also a senior member of the ANC. HPA claimed it was not aware of Chancellor House’s links to the ruling party.

However, Netwerk24 reported that Robin Duff, HPA’s financial chief at the time, did receive a warning about Chancellor House’s political ties before it was appointed as a BEE partner – an allegation that Duff strongly denied.

Big issues at Medupi and Kusile

Blom said that the switching of these tenders resulted in big issues at Medupi and Kusile – particularly when it comes to the boilers, which are only reaching 60% and 20% availability respectively.

He said there isn’t enough spare capacity on Eskom’s grid to allow for these issues to be dealt with.

“Medupi unit three was going to be taken offline as soon as possible in agreement with the supplier, Hitachi, in order to effect immediate action and try to get the availability higher than 60%.”

“Even though it has been agreed, that now can’t happen because there isn’t 800MW spare capacity on the grid.”

“On top of that, it’s proven that the Medupi boiler contract hasn’t been properly executed,” Blom added.

Get ready for stage 8

Eskom enacted stage 6 load-shedding in December, which was the worst load-shedding South Africa has experienced to date.

However, Buffalo City Municipality said all municipalities have been advised to adjust their load-shedding schedules up to stage 8.

Stage 8 will equate to 40% of the total national load being shed, the municipality said.

This can leave consumers without power for 48 hours over four days, or 96 hours across eight days.

Now read: Eskom tells municipalities to prepare for stage 8 load-shedding