Alstom expelled from Medupi over technical incapacity

Eskom has removed Alstom from the Control and Instrumentation (C&I) contract at the Medupi power station in Limpopo following the utility's dissatisfaction with the French multinational’s work, which Eskom said could not meet its technical requirements. Alstom’s removal followed the two companies’ termination of the C&I works contract for the Kusile power station in April 2015. At the time, Eskom said the Kusile contract had been consensually terminated on a “co-operative walk-away” basis. While Eskom said Alstom would continue to execute the Medupi contract, a year later, the utility quietly removed Alstom from the Medupi contract too. Eskom said last week that the Medupi contract had not been terminated.

“The parties agreed to omit certain scope from the scope of works of (Alstom) and allow (Alstom) to finish any other scope of work remaining in the contractor's amended scope,” Eskom said in a statement. The utility said Alstom’s power plant control system, Alspa, had not met its technical requirements specified “and, in addition, will not meet the availability requirements prescribed” during testing and installation. In November 2015 General Electric (GE) acquired Alstom Power. In a statement last week, GE said the Medupi contract was amended on consensual agreement by the parties concerned. “It is also worth noting that the contract was signed between Eskom and the former Alstom Power company prior to GE’s acquisition of Alstom Power. It was, therefore, an Alstom Power contract and not a GE Power contract. These are two different entities,” said GE.

Eskom said Siemens had been awarded the remaining scope of work for the C&I works at Medupi in April 2016. In terms of the contract, which Eskom awarded in 2009 for 100 million euros (R1.4 billion), Alstom engineered, supplied and installed its control system. The control and instrumentation works is considered the brain of a power plant. Business Report has learnt that, prior to the awarding of the contract, a team of Eskom engineers had scored Siemens higher than Alstom, which came second in their technical score summary. ABB and Honeywell came third and fourth, respectively. In their report, the engineers noted that Alstom did not have similar type of experience with Eskom even though they had extensive experience overseas. On the other hand, Siemens had previously done C&I work at Hendrina, Camden, Komati and Kriel power stations.

Eskom said the evaluation of the bidders was based on technical (40percent), financial (40percent) and Accelerated Shared Growth Initiative SA (ASGI-SA), which had a 20 percent weighting. “These criteria were assessed individually and as a whole, when arriving at a ranking as Eskom was ultimately seeking to get an optimised solution on price, technical considerations and ASGI-SA as a whole. "Therefore, a single leading score would not necessarily provide the winning bidder. It is to be noted that Alstom also achieved the 70percent sub-minimum technical threshold to progress further in the bidding process,” Eskom said. The utility said each discipline of the evaluation team was involved in compiling the evaluation reports and made recommendations to the board's tender committee.