Medupi project kicked further back

Project Focus

Medupi project kicked further back
Medupi project kicked further back

Eskom’s long-delayed Medupi power station project has been knocked by another hitch, with listed construction and civil engineering group Basil Read terminating an R83 million contract that it had sub-contracted to engineering solutions provider GAST.

Basil Read has also called in GAST’s R8.2 million performance bond. Donny Gouveia, the deputy chief executive at Basil Read, said yesterday that the contract it had awarded to GAST involved installing linings for an ash dump at Medupi and confirmed it had been terminated and GAST’s performance bond called up because of its “non-performance”.

But Gouveia said the termination of the contract would have no impact on the completion date of the project because Basil Read had already appointed another contractor to complete the work on an accelerated basis.

Eskom declined to comment on how the contract termination would affect Medupi’s schedule, stressing the dispute was between Basil Read and the sub-contractor. The terminated contract forms part of a R516 million infrastructure contract awarded by Eskom to Basil Read Civil in 2011.

Gouveia declined to provide any details about GAST’s non-performance, but indicated it had notified GAST and given it an opportunity to rectify errors within a certain time period before terminating the contract.

Kevin Gast, the chief executive of GAST, said Basil Read had terminated the contract despite GAST having already completed more than 95 percent of the contract and had only R300 000 of the contract remaining.

Gast said his company was also owed “a considerable amount of money” by Basil Read for six months in unpaid certified work and yet Basil Read had called up its R8.2 million performance bond.

He said GAST had already launched legal action related to the dispute, which could involve two, if not more, separate legal cases.

Gast said the company had launched a large legal process to try and prevent the performance bond from being drawn. He said the papers for GAST’s legal action would be lodged shortly and expressed confidence the company’s losses and damages could be recovered through the judicial system.

Gast declined to comment specifically about the contract difficulties it had experienced with Basil Read because of the pending litigation. Gouveia disputed GAST’s allegation that its contract was 95% completed, but declined to comment on GAST’s allegation that Basil Read had failed to pay it for six months for certified work completed.

Gast said “quite a number” of local contract workers and its own skilled employees were working on the contract. It was fortunately able to redeploy its skilled workers to other projects, but was unable to use the local contract workers, he said.

Gast was unable to quantify how many people had been working on the contract because the number fluctuated. He said GAST had more than 50 years experience, had completed more than 12 000 projects with various clients and was one of only five companies in Africa that could do the work it was doing at Medupi.

Gast said his company continued to work with Eskom on various other projects, such as the Kusile and Hendrina power stations. Eskom’s new power station build programme has been hit by a number of delays, with financial director Paul O’Flaherty indicating last month that there had been 33 months of delay on the Medupi project.

The most recent concern related to about 9 000 faulty welds on the boiler contract.
Eskom said earlier this year that the coal-fired plant’s cost had remained unchanged since 2009 at R99 billion and it still anticipated it would start the commissioning of unit 6 around July or August.

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