Eskom defends Koeberg tender award to Areva

WHEN Eskom granted the contract to replace six steam generators at its Koeberg plant, it was entitled to consider which bidder could offer the most “comfort” that the new generators would be built on time, the High Court heard yesterday.

The tender at the centre of a court dispute between Eskom, Westinghouse, a subsidiary of Japan’s Toshiba, and France’s Areva is worth about R4.3bn. Koeberg contributes 5% (1,960MW) to Eskom’s overall electricity supply, but is SA’s only nuclear power station and is considered crucial in the government’s longterm nuclear commitment of 9,600MW by 2023.

Westinghouse and Areva were the only two bidders who satisfied the technical criteria to undertake the job.

Westinghouse’s bid was cheaper — how much cheaper is disputed — but Eskom awarded the tender to Areva owing to “strategic considerations” and as Areva, in its schedule for completing the job, detailed how it could give a three-month margin for error (called a “float”) in its build.

This provided comfort to Eskom that the job would be finished in 2018, Eskom counsel Vincent Maleka SC said. Westinghouse had also provided a schedule to meet the 2018 deadline.

But both schedules were “tight” and Westinghouse did not give details as to its float, Mr Maleka said.

The case is scheduled to run for three days.

On Monday, Westinghouse counsel Jeremy Gauntlett SC said the float and the strategic considerations, including who had originally manufactured the equipment and controlled subcontractors, were introduced at the last minute as tender criteria and were a deviation from the original criteria.

He said the difference between the Westinghouse and Areva bids was about R266m, and that until the strategic considerations were introduced, Westinghouse was the “clear winner”.

But Mr Maleka yesterday disputed the R266m figure, saying the difference was about R36m. He argued that, even if not explicitly referred to as “strategic considerations” in the original tender, the considerations were made known to both bidders.

“Equal treatment of bidders was the hallmark of the application on strategic considerations,” he said.

There could be no material deviation from the tender if the need for a float fell within the overall objectives of Eskom’s procurement policy, said Mr Maleka. The decision to emphasise the float and other strategic considerations, over and above price, could not be considered irrational in law, he said.

Areva counsel Peter Hodes SC said he agreed with everything Mr Maleka said, except that the strategic considerations were part of the original tender requirements.

Areva won the Eskom tender owing to ‘strategic considerations’ Equal treatment of bidders was the hallmark