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Aveng lodges R40m claim against Eskom

For non-payment related to Majuba rail contract.
A section of the Majuba rail project (image supplied in 2015). Eskom is defending the case against it. Image: Supplied

Infrastructure and resources group Aveng has lodged a R40 million high court claim against Eskom because of the power utility’s non-payment of amounts allegedly owing for the Majuba rail project in Mpumalanga.

Eskom has confirmed that it is defending the matter.

The multi-billion rand rail project contract was awarded to Aveng in 2013. The work was expected to be completed within three years but Eskom subsequently revised the completion date to December 2017.

Aveng CEO Sean Flanagan confirmed last year that the group had instituted legal proceedings against a then undisclosed state-owned enterprise (SOE) because of non-payment for a completed contract, the identity of which was also not disclosed.

Dispute

Eric Diack, executive chair of Aveng, said in February this year that the claim was against Eskom. Eskom subsequently confirmed that Aveng had launched a high court claim for the payment of R40 million related to the Majuba rail project but appeared to dispute that the project had been completed.

“Whether the contract was completed or not is for the court to decide,” Eskom said via email.

Eskom declined to comment on the reason for not paying Aveng the amount allegedly owed, or if it is denying that this amount is owed to Aveng.

“This matter is before court and accordingly the principle of sub judice applies,” it said.

Eskom’s failure to ensure the completion of the project by March this year will reportedly have a significant impact on loans it has secured from the World Bank.

Read: Dealing with the elephant in the room that is Eskom

It was reported by Fin24 in June last year that Eskom was in a race against time to finish the Majuba rail project and that failure to do so by March 2020 would see Eskom having to renegotiate the terms of billions of dollars in its other World Bank loans.

It claimed this could have a knock-on effect on Eskom’s other World Bank-funded projects, such as Medupi Power Station.

An email response from Eskom quoted by Fin24 stated: “If the project is not completed by March 2020, Eskom will have to engage the World Bank on the new terms and conditions [of its loan].”

Read: World Bank cuts South Africa GDP forecast on Eskom fears

However, Eskom declined to comment on this issue when approached by Moneyweb.

“Please note that Eskom cannot discuss any funding sources or details of its loans in public. We are governed by rules of engagement and covenants associated with our loans or/and facilities,” it said.

Attempts to obtain comment from the World Bank were unsuccessful. Neither country director for Africa Marie Francoise Marie-Nelly nor press secretary and group spokesperson David Theis responded to questions emailed to them by Moneyweb.

The Majuba rail project is part of the Eskom Road to Rail Initiative and involves the construction of a 68km railway line that links the Majuba Power Station to the main coal railway hub in the town of Ermelo in Mpumalanga.

Aveng Grinaker-LTA’s civil engineering division was awarded the project in January 2013 with construction activities commencing in March 2013.

The scope of work included construction of the bulk earthworks, layer works, bridges and culverts, with Aveng Rail accountable for the construction of the railway line and the overhead power lines.

Aveng Grinaker-LTA was also responsible for all construction activities required to get the formation ready for the laying of sleepers and track, comprising earthworks, layer works, drainage and concrete structures.

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This is going to be very interesting. And someone is going to lose this court claim. How difficult is it to see if a contract is completed?

There is a lot of Gupta type skulduggery around this contract in my opinion. I have seen the line – it is complete to all intents and purposes but no maintenance has been done for a few years and there is bickering with another crooked SOE; Transnet. As I understood it, multi million ZAR contract has been let to a mini Gupta firm who are just faffing around, possibly collecting loot all the while. The people running it from the Eskom side seemed incompetent, stifled by red tape and possibly on the take. Good luck unraveling this lot.

Eskom eish! Where they gonna get R40m?

Pay tax? Use electricity? Then it’ll be you.

One bankrupt company sues another bankrupt company

End of comments.

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