Picture: REUTERS
Picture: REUTERS

Eskom executives were allegedly sidelined after they questioned the wisdom of awarding Dongfang a R4bn contract to supply a new boiler to Duvha power station.

The Chinese company was awarded the tender even though its bid was R1bn more expensive than its rivals.

A paper trail obtained by Business Day shows Eskom bent over backwards to ensure Dongfang was awarded the deal even though its bid had severe defects.

On Friday, the High Court in Johannesburg interdicted the contract after losing bidders Murray & Roberts and General Electric claimed in their filings that Eskom had rigged the tender to favour Dongfang.

Sources close to the power utility told Business Day that group executive for group capital Abram Masango was removed from his post just days before the contract was signed.

Matshela Koko, who was then acting CEO, said Masango had been "seconded" to his office to help him and chief financial officer Anoj Singh in executing Eskom’s corporate plan. Masango was replaced by Prish Govender, who signed the final board submission and Dongfang contract five days later. Koko has denied playing any role in the tender or Masango’s removal from his post.

Masango, who was made acting CEO of Eskom Enterprises on Friday, declined to comment on the allegations.

One reason the losing bidders took Eskom to court was that the utility’s request for proposals stipulated only two bidders would make it to the final round of negotiations, yet Dongfang was added to the list at the last minute.

Among the reasons given for Dongfang’s success was that its fixed price, though much higher, was less risky than the variable price bids of General Electric and Murray & Roberts, which were subject to escalations.

The submission also said General Electric’s black economic empowerment (BEE) certificate could be fraudulent and Murray & Roberts had a history of collusive behaviour and of costly delays during construction of Kusile and Medupi.

The sources said that although Masango had signed this submission, he raised several awkward questions about it. Among these was why Eskom was paying a contingency fee for a fixed-price contract, whether it was legal to disqualify General Electric for an alleged faulty BEE certificate and whether Dongfang complied with Eskom’s black empowerment requirements.

A legal opinion sought hastily on the same day about General Electric’s BEE certificate found no evidence of fraud or grounds for disqualification.

On Sunday, Eskom declined to answer questions about the tender, including whether Dongfang was BEE compliant when the company was awarded the contract.

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