Gordhan says Eskom is quantifying R841m loss at Kusile
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Cape Town - Power utility Eskom is in the process of quantifying losses incurred in the R841 million accommodation building for workers at the Kusile power station.
This was revealed by Public Enterprises Minister Pravin Gordhan in his written response to parliamentary questions by DA MP Benedicta van Minnen.
The incomplete project, known as Wilge Residential Development Project, was initially costed at R260m but it ballooned to more than R800m when it was halted in 2019.
“Eskom is in the process of quantifying the losses incurred and the parties against whom legal actions should be taken. Counsel has been engaged to advise on the merits of intended action,” Gordhan said.
In separate responses to DA MP Michele Clarke, Gordhan said an open tender process was followed for the project and 24 companies submitted tenders.
He maintained that Liviero Wilge Joint Venture was contracted to build the 336 units by December 2013.
“The duration of the contract was 18 months and the accepted contract price was R226 485 875.455 excluding value-added tax and cost price adjustment,” he said.
Gordhan said although the initial contract was R226.5m, the final monetary value at adjudication was R600.48m.
“The cost incurred to date is R632.64m on the development of the flats paid to Liviero Wilge Joint Venture (LWJV) and an additional R209.23m on common infrastructure and related work paid to other service providers,” he said.
Gordhan said a total amount of R841.87m has been paid to service providers.
His replies show that R40.6m was spent on accommodation during the construction of the flats.
Gordhan also revealed that Eskom instituted disciplinary action in 2019 against the general manager for group capital division facilities, Reuben Mamorare, for the wasteful expenditure.
“The disciplinary process was concluded in January 2020 and the general manager was found guilty and subsequently Eskom terminated his employment,” he said.
Gordhan added that Eskom had initiated a legal process to recover monies from Mamorare.
“Eskom is currently concluding a disciplinary process (against) an additional implicated employee. This process is at an advances stage,” he said.
Asked whether the building plans, engineering compliances and bill of quantities were submitted and approved by the local authority, Gordhan said the required documents for the rezoning and building permission were submitted to the local authorities and approved.
He also said the final inspection for occupation certificates and electrical compliance by the local authority was not completed owing to the termination of the contract.
The development was also enrolled with the National Home Builders Registration Council and certificates were issued.
“The development was suspended before final inspections for relevant certifications were done.”
In February, Eskom chief executive André de Ruyter told the public enterprises portfolio committee that the power utility was in negotiations to sell the flats to the Human Settlements Department.
De Ruyter also said the Special Investigating Unit was investigating the project, which had experienced massive overruns.