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Eskom to overspend by more than R52 billion on power contracts

A report submitted to Parliament Appropriations Committee by the Office of the Central Procurement Officer has uncovered Eskom will overspend by R 52, 2 billion or 48, 5% on the Medupi and Kusile Power stations, according to Democratic Alliance (DA) Deputy Minister of Finance Alf Lees.

Lees said in a statement on Wednesday, Medupi Power Station in Lephalale, Limpopo will overspend by R 26, 0 billion (52, 2%) while Kusile in Mpumalanga utilises R 26, 2 billion (45, 3%), more than the normal amount.

“I have since written to the Office of the Chief Procurement Officer to determine if there are any active forensic investigations concerning these contracts, and if not, they must be established as a matter of urgency, said Lees.

Eskom Rotek Industries, subsidiary of Eskom, is handling a contract on which there has been a 936, 1% overspend.

The biggest overspend goes to Mitsubishi Hitachi Power with R 10, 2 billion.

“These contracts have been hindered with controversy as far back as the involvement of ANC’s venture arm, Chancellor House was uncovered,” said Lees.

In 2015, said Lees the DA laid charges against ANC’s Chancellor House after it emerged that Hitachi Ltd, the company which won R38.5 billion tender to supply Eskom with boilers for the Medupi and Kusile Power stations 2007, admitted having made disgraceful payments estimated at $6 million, in the process paving the way for the tender.

Lees added that other outrageous overspends are Alstom S&E Africa  – R,7 billion for turbines and instrumentation, Mps Joint Venture –R6,6 billion for civils, Kusile Civil Works-R4,8 billion for civics, Esofranki Civils – R1,9 billion for underground civils, Basil Read – R1,8 billion for the construction  and Aveng Africa-R1,3 billion for plant installation.

“The conclusion that must be arrived at is that there was extreme mismanagement of these contracts, fraud, and corruption or a combination of these,” added Lees.

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