Fin24

Medupi contractors blast Eskom

2012-04-29 14:48

Lephalale – Eskom took them from bad to worse.

This is according to four small contractors for whom building contracts at Eskom’s Medupi power station outside Lephalale meant bankruptcy rather than prosperity.

Last year Sake24 reported that prospects of at least three years’ construction work at Medupi rapidly went awry for Lezmin 3453, TT61, Baarata and Zin Zi Construction.

The contractors believe they were forced into unworkable contracts.

According to Johan Strydom of Lezmin, they each had to provide workers to do the bricklaying and plastering for the structure housing the coal burners. The contractors had to pay the wages and make additional payments for, inter alia, unemployment insurance and employees’ tax. The main contractor, the Medupi Power Station Joint Venture (MPSJV), which is led by Murray & Roberts, subsidiary Concor, and Grinaker LTA, subcontracted the construction work to them and was itself to have provided the material.

The biggest problem was that the four subcontractors had to pay their workers by the hour, but MPSJV paid them per square metre of completed construction.

The subcontractors were frequently unable to access the construction site because of factors outside their control and often lost a lot of money because they still had to pay the workers.

It wasn't long before they couldn't pay their workers. MPSJV was prepared to advance the money, but when the contractors tried to claim back for their costs, their calculations and those by MPSJV did not agree.

Baarata’s Martin Nel says he has shelled out about R26m, but has been paid only R9m.

All four left the site last year and then instituted legal action against MPSJV and Eskom.

In November, after Sake24 had reported on the situation, Eskom however apparently intervened and appointed an independent auditor to investigate what had gone wrong.

The four contractors provided all the information that the auditor requested.

Eskom spokesperson Hilary Joffe sent an email to Sake24 in December confirming that the results were expected to be available by the end of the month.

Shakes Ndou of TT61 says all indications are that the report has long been finalised and that the results would be favourable for him and his three colleagues. Since then every attempt made by the contractors to get sight of the report has failed. Joffe has also ignored a number of enquiries by Sake24 in this regard.

Shamina Mulla of Zin Zi says she feels betrayed by Eskom’s attitude. “We were so grateful when Eskom intervened, but we now realise it made fools of us.”

The contractors say had they not waited for Eskom’s report, they could have sooner, when they were in a  better financial position, continued with legal action. This are now in a bad way and in terms of the court rules MPSJV is demanding a deposit of R250 000 from each before the case can continue.

Last week Ndou approached the Presidential Hotline and also handed a letter to the office of Brian Dames, chief executive of Eskom. Sake24 is in possession of an email of a letter in which Karen van der Byl, Dames’ personal assistant, acknowledges receipt of it.

MPSJV previously said the small contractors did not understand the claims process. It said they regarded it as the difference between the loss they showed and the profit they believed they should have made. In a written statement MPSJV claimed to have been particularly forbearing, but that there was point at which subcontractors had to accept responsibility.

 - Sake24

For more business news in Afrikaans, go to Sake24.com.

 

Comments
  • Judith - 2012-04-29 16:10

    So SMEs are trashed again! I am beginning to see how there is a real need to advise these pioneers when they come to sign contracts!

  • Koos - 2012-04-30 00:38

    Do business with Eksdom at your own peril.

  • Skhumbuzo - 2012-04-30 10:59

    CONTRACTS MUST BENEFIT ALL PARTIES AT THE SAME TIME ESKOM MUST ENSURE THAT THOSE CONTRACTORS UNDERSTAND AND FAMILARISE THEMSELVES WITH THE CONTENTS OF THE CONTRACTS TO AVOID SIGNING THE CONTRACTS UNDER THE \ UNDUE INFLUENCE\ AND AGAIN GIVEN WEATHER CONDITIONS SURROUNDING THAT AREA \ SQUARE METER PAYMENT SYSTEM \ WAS NOT THE MOST APPROPRIATE ONE BEARING IN MIND THAT THOSE PEOPLE ARE EMERGING CONTRACTORS. EVEN CONTRACTORS THEMSELVES IN FUTURE THEY MUST AVOID SIGNING CONTRACTS WHITH THEIR EYES BEING CLOSED.

  • Adam - 2012-05-01 13:20

    I'm just wondering if anyone has heard of the Turbo Element, I think that's what they call it. They claim to save 40% of each geysers electricity usage, without affecting your geyser use. Does anyone know if this really works?

      Brian - 2012-05-23 13:10

      Energy is energy. Two methods to save energy for geysers are:- 1. solar which is energy from the sun and is basically free after capital cost is recovered (+/- R15000 & 5 years). Disadvantage - you do need the sun and overcast days do not generate much energy. Advantage - hot water even if power is off. 2. Heat pump - similar to an air conditioner system and generates more than twice the energy than it consumes, again capital cost has to be recovered,(+/- R15000 & 5 years). Advantage - it costs i kWh for every 2 kWh of energy required to heat the water. Disadvantage - not power no hot water. Combination of both is probably the best option.

  • bohmerjeanette - 2012-05-28 12:16

    Dear friends, those Constractor down fall was due to them not know the industry, and they were doing 150 bricks a day, no contractor will make money if their breakeven level was based on 600 or 650 brick per day per bricklayer. TT61 went down because he failed to make payments to SARS, nothing to do the the Contractor or Eskom. The other 3 paid the bricklayers at 50% or more of the required minimun wages as stipuate in the PLA. Thus if they failed in achieving 650 bricks per bricklayer per day, they would run at a loss. That error Mr Strydom admitted himself.

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