ESKOM DEALT A R200m BLOW
Judgment shows money is being wasted trying to keep ageing plant running, says Koeberg Alert Alliance
CASH-STRAPPED Eskom will have to cough up just over R208 million for being in breach of a contract between themselves and a construction company over work done at the Koeberg nuclear power station.
The Supreme Court of Appeal (SCA) has set aside a Gauteng high court order and substituted it with an order dismissing the appeal with costs, including the cost of two counsel.
The matter related to a contract that had been entered into for the replacement of the steam generators at the Duynefontein Koeberg Nuclear Station units 1 and 2.
The contract between Eskom and Framatome made provision for what is called “compensation events” which allowed Framatome to claim from Eskom additional payment and extra time to do the work.
Compensation events entitle the contractor to be compensated for any effect the event has on the prices and the contractual sectional completion dates or key dates.
SCA documents detailed that there was a compensation event for which Framatome provided a quotation and for which the project manager had to perform an assessment of the compensation event.
SCA judgment documents read: “In his findings, referred to as ‘Decision 11', the adjudicator determined that Eskom had failed, within the Project Manager's assessment, to make a full assessment of the compensation event in due time … The adjudicator concluded that Framatome's
quotation was deemed to have been accepted by Eskom.
“The effect of this decision was that the adjusted key dates, sectional completion dates, completion dates, activity schedule and payments of the quotation became contractually binding upon the parties.
“Aggrieved with that decision, Eskom notified the adjudicator of its dissatisfaction … This prompted Framatome to institute enforcement proceedings in the Gauteng High Court.”
Judge Rammaka Mathopo said: “The high court dismissed Eskom's challenge to Decision 7 on the basis that the dispute fell within the jurisdiction of the adjudicator and that Eskom neither objected to that decision nor gave notice of its intention to refer the decision to arbitration.”
The judge said the appropriate forum to have the matter ventilated would be through arbitration and during argument at the court. Eskom confirmed the dispute has been referred to arbitration.
Judge Mathopo said: “Eskom resisted the payment to the applicant on three bases. First, it contended that the amounts claimed are not due and payable. Secondly, the proposal to change the payment did not and could not form part of the quotation under the contract. Thirdly, in deeming the contractor's quotation as acceptable, the payment provisions of the contract were changed and this was outside the jurisdiction of the adjudicator. These arguments have no merit.
“In terms of Decision 11 the amounts claimed were due and payable as a result of the
contractor’s quotation which was deemed acceptable by the project manager … What has been claimed by Framatome is consistent with the contractual provisions that govern such payments.”
Framatome declined to comment while enquiries to Eskom were not answered by the deadline.
Spokesperson for anti-nuclear activist organisation Koeberg Alert Alliance, Peter Becker, said the judgment showed there was even more money being wasted on the attempts to keep the ageing Koeberg plant running.
“The refurbishment of the Koeberg plant including the replacement of the steam generators has been fraught with problems since it started … South Africa has a problem with load shedding, and this will be particularly severe over the next two year period.
“This is exactly the time over which Koeberg will be repeatedly shut down to install the new reactors in the containment buildings, and this will only make load shedding worse with associated huge costs to the economy.
“The rational decision would be to abandon the refurbishment of Koeberg, keep it running over the next two years until it reaches the end of its lifetime, and to spend that time enabling and connecting more renewable power sources to the grid,” said Becker.