B-BBEE Commission finds Eskom failed to comply with the B-BBEE Act in awarding a tender for the Duvha Power Station

The Commission has found that Eskom Holdings SOC Limited failed to comply with section 10 (1) (b) of the B-BBEE Act when it awarded the tender (RFQ CORP 3571) for Duvha Power Station to a Chinese owned entity that did not meet the B-BBEE requirements. As a result, the Commission has recommended to Eskom Holdings SOC Limited to cancel the contract and to conduct an independent audit of all its contracts above R1 billion from 2014 to check compliance with B-BBEE requirements.

The Commission received an anonymous complaint alleging that the tender process for the boiler at Duvha Power Station (RFP CORP 3571) by Eskom Holdings SOC Limited did not comply with the requirements of the B-BBEE Act. The complainant told the Commission that the tender was awarded to a Chinese owned company, Dongfang Electric Corporation Limited, that does not comply with the B-BBEE requirements in South Africa. Upon investigation, it was found that Eskom Holdings SOC Limited failed to comply with section 10 (1) (b) of the B-BBEE Act in awarding of the tender to Dongfang Electric Corporation Limited, an entity with 0% black ownership when the tender required at least B-BBEE Level 4.

The B-BBEE Act was amended in 2013 specifically to make it mandatory in section 10 for organs of state and public entities to implement the B-BBEE Act, and not only when they choose to do so.

Therefore, in addition to the recommended contract cancellation and the independent audit by Eskom Holdings SOC Limited, we recommended investigations in respect of officials that were involved in this tender process so that decisive action can be taken to prevent this in future. Of concern also is the possibility that this tender process may have been deliberately compromised to favour a specific entity.

Eskom Holdings SOC Limited has cooperated and agreed to implement the recommendations of the Commission.

The Commission has since referred the findings in this matter to the Minister of Public Enterprises and the Director-General of National Treasury for further consideration in line with the recommendations. The success of the B-BBEE Act also depends on the state implementing it properly and consistently, and this must be carefully monitored.

The summary of the findings and recommendations of the Commission can be found on www.bbbeecommission.co.za

Issued for the B-BBEE Commission:
Sidwell Medupe – Departmental Spokesperson
Department of Trade and Industry
Telephone: +27 12 394 1650
Mobile: +27 79 492 1774
E-mail: MSMedupe@thedti.gov.za
Follow us on Twitter: @the_dti

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