Johannesburg — ESI-AFRICA.COM — 01 February 2011 – South African national power utility Eskom’s version of the state of its contract with Murray & Roberts Holdings for the civil work at the Medupi power station is far removed from that of the construction giant’s chief executive Brian Bruce.
In a statement here Eskom financial director Paul O’Flaherty has strongly denied that there was a shortage of money for this contract or for the contract as a whole; that payments were being dragged out; or that M&R should in effect finance Eskom’s capital expenditure.
This denial came after M&R had partly blamed delays in the payment of claims and contract extensions at Medupi for the reversal of income previously declared “’ an announcement that led to M&R’s share price tumbling almost 25%.
On Friday Bruce told some 70 South African and international analysts and journalists that the scope of the Medupi contract had grown significantly, and that it was taking too long to finalise claims for changes and extensions to the contract.
Speaking to Sake24, O’Flaherty confirmed that 53% of the civil contract had been completed, but he denied that all the cash had been exhausted, as mooted by Bruce. He said Medupi was South Africa’s biggest building project to date, and that changes and extensions were common in such a complex project. He denied that the scope of the extensions was out of order and said that all extensions and changes had been financed.
If M&R had miscalculated and the work was costing it more than the agreed amount, Eskom would not foot the bill. But O’Flaherty did not know if that was the case and could not comment on how M&R managed its cash flow.
He said the Eskom contract complied with international standards and claims that were submitted in time and were justifiable were paid out quickly according to the prescribed process – a process that took months, not years. He added that Eskom managed its capital expenditure with an iron fist, and inflated or questionable claims were certainly resisted.
But Eskom’s door was open for discussion with M&R. Eskom had already spoken to Brian Bruce and would speak to him again if necessary, said O’Flaherty.