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Eskom: ‘bail out’ package to fund reconstruction of coal silo?

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Eskom’s coal-fired power station Majuba in Mpumalanga suffered damage to one of it’s silos in November 2014

In South Africa, the state-owned power utility Eskom has released a pre-qualification notice for the reconstruction of damaged infrastructure at its coal-fired power station Majuba in Mpumalanga. The power plant suffered damage to silo 20 when it cracked and collapsed on 1 November 2014.

The ailing infrastructure housed 10,000 tonnes of coal, which immediately cut the plant’s generation output by half from its normal 3,600MW to 1,800MW, which fell to 600MW by 2 November 2014.

This came at a time when Eskom was forced to implemented scheduled power cuts, unplanned maintenance and manage financial woes. In addition, Eskom has ‘spring cleaned’ its hierarchy by giving the boot to a handful of its top brass.

Pre-qualification notice

Eskom plans to award the contract by 1 December 1, 2015 and the reconstruction is expected to be completed by 31 October 2016, Creamer Media reported.

In addition to reconstructing the damaged silo, the contract will extend to include supporting structures for silos 10 and 30 as well as the reinstatement of the coal conveyor system.

According to media the closing date for the pre-qualification is 17 August 2015 at 10:00am.

Eskom’s under the table discussion

In other Eskom news, yesterday the utility issued a statement in response to the Business Report, which ‘leaked’ information about Eskom’s “unprecendted move” in May regarding the selection of three boiler-serve contractors.

The Business Report claimed to have in its possession minutes of a meeting that took place at Eskom’s Megawatt Park headquarters on May 8 2015. The minutes indicated that Eskom had punted for three contractors namely Actom, Babcock and Steinmuller that would issue 30% equity, which would be held by Rotek, a wholly-owned support service subsidiary of Eskom.

Eskom response

Eskom said in a company statement: “Eskom confirms that the equity share by boiler-serve contractors has been tabled for discussion as part of the negotiation for the renewal of the boiler-serve contracts for the period 1 April 2016 – 31 March 2026.

“Eskom was granted a mandate to negotiate a 30% shareholding from boiler-serve contractors; Steinmuller, Actom and Babcock – in return for a portion of the order book, which is currently valued at approximately ZAR30 billion [$2 billion].

“The three contractors are responsible for outage and maintenance repair services for boiler pressure parts for 15 Eskom power stations.”

Eskom is currently seeking various options for constructive partnerships with the boiler-serve suppliers, to drive Eskom’s strategic procurement approach.

“These include improving plant and safety performance, providing greater insight in addressing the high level of unplanned boiler maintenance and enhancing skill transfer,” Eskom said.

In it’s defense Eskom said that it was unfortunate that the ‘leaked’ information was “perceived as a non-negotiable and shut condition, which is in clear contradiction to the way Eskom conducts its business.”

Ashley Theron
Ashley Theron-Ord is based in Cape Town, South Africa at Clarion Events-Africa. She is the Senior Content Producer across media brands including ESI Africa, Smart Energy International, Power Engineering International and Mining Review Africa.