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Eskom criticised for not claiming damages from contractors

The Free Market Foundation think tank says that despite an apparent lack of funds to pay for clean water, roads and other essential services, South Africa’s 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 who have strikingly failed to perform against contracts and are manifestly late in completing the power station urgently needed by the country.

Late in 2013, minister of public enterprisers Malusi Gigaba said 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 tax payers to claim liquidated damages based on, among other things, that:

  • 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;
  • 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.

The Free Market Foundation is an independent public benefit organisation founded in 1975 to promote and foster an open society, the rule of law, personal liberty and economic and press freedom as fundamental components of its advocacy of human rights and democracy based on classical liberal principles.