Utility not giving up beef with 100-year associate

Eskom has applied for leave to appeal against a ruling in a case brought against it by one of its long-serving contractors, about the awarding of maintenance contracts.

The matter heard in the Pretoria high court in October involves Babcock Ntuthuko Engineering, an SA subsidiary of Babcock International Group, which was successful in its bid to have the contracts set aside. The company brought the court action after it failed to have its service contract renewed during a tender process. The tenders in question are worth about R16bn and were awarded in December 2021 to provide boilerserve maintenance and outage repair services at 15 coal-fired power stations.

In response to questions from Business Day about whether these legal proceedings would in any way affect current maintenance work at power stations, Eskom spokesperson Sikonathi Mantshantsha said “maintenance work carries on as the court did not stop that”.

Babcock argued the Eskom board erred in its decision to disqualify its bid on the basis that it had failed to comply with a requirement in the request for proposals to provide an ISO 3834 certificate (a general welding certificate) issued by the Southern African Institute of Welding (SAIW).

Herman Potgieter, the CEO of SAIW Certification, told Business Day the ISO 3834 welding certificate specifically relates to the management system of welding projects on site. It is a certification process introduced by SAIW in 2008, and Eskom has since adopted it as an important prerequisite in the hiring of contractors. It is a quality control measure, he said.

“Eskom made it mandatory

for contractors to submit a 3834 ISO certificate with all tender applications that include welding projects, because it ensures that all welding done by contractors at power stations, as part of maintenance, is done properly and effectively,” said Potgieter.

According to Babcock, Eskom was already in possession of Babcock’s general welding certificate as part of the company’s existing boilerserve maintenance contracts at the time, and Babcock’s specialist welding certificates (which a company cannot receive without first being certified for general welding) were included with its tender submission.

The tender was jointly awarded to Actom and Steinmüller Africa. Before December 2021, the three companies (Babcock, Actom and Steinmüller Africa) were all contracted to perform specialist engineering services at different Eskom power stations.

In a judgment delivered on November 17, the court found the disqualification of Babcock was irrational. Eskom was ordered to conduct a fresh tender process, to be expedited and awarded within eight months.

“The court ordered that in light of the country’s constrained electricity supply, current maintenance services should continue uninterrupted pending the awarding of the new tender,” Babcock said.

An original equipment manufacturer for Eskom, Babcock has been working with the utility since 1920 on the design, build and maintenance of power stations.

In new court documents filed by Eskom this week in which it seeks leave to appeal against the judgment, it argues the court erred in its interpretation of the documents that had to accompany tender bids. Eskom challenged the court’s reading of the requirements for certification.

According to the judgment, a company would only have to submit a statement of certification rather than necessarily a copy of the certificate itself.

Eskom said this interpretation would “lead to an insensible result” where any bidder could simply declare that it was certified, “even if it actually was not”.

An unqualified bidder could be left responsible for servicing power stations and ensuring the provision of electricity, Eskom states in its application.

THE TENDERS IN QUESTION ARE WORTH ABOUT R16BN AND ARE TO PROVIDE MAINTENANCE AND OUTAGE REPAIR SERVICES

BABCOCK HAS BEEN WORKING WITH THE UTILITY SINCE 1920 ON THE DESIGN, BUILD AND MAINTENANCE OF POWER STATIONS