City of Cape Town’s water ‘bungle’
The company, GrahamTek, based in Strand, submitted a proposal in May to provide the region with 450 million litres a day within 18 months at “affordable” prices. It has accused the city of failing to appreciate the scale of the water crisis and the urgency of finding solutions, of putting out tenders for “Mickey Mouse”-scale projects with terms so complex and onerous that the tenders were not feasible and of wasting months before putting out the first workable tender - only this week.
But the City insists it was constrained by “procurement mechanisms within the bounds of the law”.
The mayoral committee member responsible for water, Xanthea Limberg, told Weekend Argus: “We received senior legal advice which confirmed that we need to be compliant as far as possible and we catered for all various options during the tender process. These tenders are competitive tenders.”
She acknowledged: “In the latest batch of tenders, the construction period for desalination plants has been reconsidered, as was determined after analysing previous responses from the market.”
Limberg said that while it was “not appropriate to engage on the merits of the offerings of individual businesses”, the emphasis of the City’s plan was to use different technologies, from water re-use, groundwater abstraction and desalination, to deliver up to 500 million litres of non-surface water “as quickly as possible using procurement mechanisms within the bounds of the law”.
Back in May in a detailed 9 000-word “white paper”, GrahamTek told the City it could deliver 100 million litres of desalinated water daily within four to six months, while simultaneously developing bulk infrastructure for larger, more permanent plants which, in 18 months, could provide up to 450 million litres a day, nearly two-thirds of Cape Town’s current requirements.
Instead, GrahamTek chief executive Julius Steyn told Weekend Argus yesterday that the City had failed to act with sufficient urgency.
“I am very frustrated,” Steyn said. “The solution could have been provided. There’s absolutely no excuse for this failure. They ignored the warnings in meeting after meeting, possibly for fear of doing something wrong.”
Steyn said it was possible this was because the City was anxious to “follow due process” and ensure “prudent tender procedures”.
“And that’s good. But then the tenders should have been much better structured. The lead times for projects like this are long, and yet, despite the acute urgency, (the City) were not prepared to make urgent decisions.”
Steyn said the “final tender of just a few days ago is the first really potentially sensible one, offering tenderers the opportunity to choose their own site, and produce between 5 and 15 million litres a day”. “This last tender should have been the first.”
The earlier tenders were for a “Mickey Mouse” capacity of 2million litres a day, with a two-year pay-back period, which was “almost impossible, and very expensive”. “You don’t get bank finance for that period.”
Conditions on where equipment could be located “would have made it incredibly expensive”.
Limberg said: “Multiple tenders have either been advertised or will be advertised in the coming weeks for various technologies. This is the process for procurement and all private-sector solution providers are well aware of that.
“We encourage bidders to participate in the tenders. The private sector is part of the solution to securing Cape Town’s water future.”
GrahamTek was founded more than 20 years ago by Koerie Graham (currently chairman of GrahamTek Holdings Ltd), who invented the “16-inch Reverse Osmosis Technology” used in the company’s plants.
Graham is described as having invented 33 water treatment patents and of being “personally involved” in 130 desalination installations in 16 countries, including Iran, Ghana, Singapore, Uzbekistan, Kazakhstan, Australasia and the Americas.
He received the Best Technology Global Award in 2008 from a panel of judges assembled by Global Water Intelligence.
In the company’s proposal to the City in May, it noted: “Cape Town is experiencing a growing water crisis and the city is compelled to take decisive emergency decisions to avert an economic catastrophe.”
It went on: “This document demonstrates that emergency capacity of 100 million litres per day can be provided within four to six months, growing to 450 million litres within 18 months.
“This document also demonstrates that the capacity does not come at an astronomical cost but is affordable at approximately R11.50 per cubic metre of potable water.”
The company proposed deploying “temporary modular and fully mobile 20 million-litres-per-day desalination plants at strategic locations - Cape Town (40MLD), Hout Bay (20MLD), Simon’s Town (20 MLD) and Gordon’s Bay (20 MLD) - to rapidly supplement the City’s water supply without the need to build time-consuming bulk infrastructure”.
It committed itself to deploying up to 100 million litres per day within four months.
“The bulk infrastructure for larger more permanent plants will be constructed in parallel - on city-owned land at Firgrove Coast near Macassar - and a site immediately adjacent to the Koeberg Power Station cooling water fallout - and the mobile plants can then be relocated and installed there when completed, providing up to 450 million litres per day, nearly two-thirds of Cape Town’s current requirement.
“The company proposed a public-private partnership company in which the City owns the land and associated infrastructure and grants the use of the land and servitudes to the company.
“The funding is provided against a Water Treatment Agreement between the City and the public-private partnership company”, with a term of 25 years (the capital expenditure requirement being funded and recovered through the Water Purchase Agreement), after which the City will own 100% of the operating assets.”
The document says the estimated cost of providing the 450 million-litres-a-day “solutions” will be R8.5billion, based on a cost to the City of R11.50 per cubic metre of desalinated water.