Group reiterates confidence it has not been overpaid by Eskom for two contracts at the power plant.
A binding final decision on the more than R1.6 billion Stefanutti Stocks claim against Eskom related to a Kusile Power Station building project is now only expected to be published by the Dispute Adjudication Board (DAB) in February 2025.
Stefanutti Stocks CEO Russell Crawford previously indicated that the decision was expected to be published during the third quarter of 2024.
Crawford recently also reiterated that Stefanutti Stocks is confident that the final payment application related to two contracts in joint ventures (JVs) at Kusile is accurate and therefore the group has not made any provision for overpayments.
Eskom in June 2020 alleged in a Kusile Power Station contract investigations briefing document “it had overpaid almost R4 billion to various contractors at Kusile, including an estimated R1 billion to two Stefanutti Stocks JVs”.
Other alleged overpayments highlighted by Eskom at the time included R1 billion to ABB South Africa, which in 2020 agreed to pay Eskom R1.56 billion in full and final settlement of the overpayment dispute, which related to a contract unlawfully awarded through corrupt means for work at Kusile.
Stefanutti Stocks has continued to dispute that it, or the JVs it was part of, have been overpaid, resulting in the disputes being referred to a DAB.
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These overpayment allegations by Eskom related to the Kusile Building Project Stefanutti Stocks-Basil Read (SSBR) JV Package-16 and Kusile Power Station Stefanutti Stocks-Izazi JV Package-28.
Basil Read, which is in business rescue, sold its 50% stake in this joint venture in September 2017.
Crawford said during a recent presentation on the group’s interim financial results that agreement of the final account for the Kusile Building Project SSBR JV Package-16 project remains outstanding, but it is the group’s intention to conclude this by the end of the year.
He said a single variation remains a matter in discussion between the group and Eskom and it will declare a dispute if agreement is not reached.
Claim 5 for this contract covers the period up to 31 December 2019.
Crawford said the parties continue to participate in the claims resolution process, which involves independent experts in support of the DAB evaluating the causes of delays and their quantification.
He said the claims resolution process provides for the issuance of interim decisions, which will then be consolidated into a single decision that will then be binding on the parties.
Crawford said that to assess the delays during the commissioning phase, the DAB experts continue to work towards finding solutions to deal with the time and cost impact of Phase 3.
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“We anticipate this process to be completed by the end of the [financial] year.
“Following the conclusion of Phase 3 delay entitlements, a final expert delay report will be drafted and issued by the DAB as an interim decision,” he said.
Crawford added that the quantum experts and DAB have made good progress in respect of the financial aspects of the claim and the remaining matters in dispute have been substantially reduced.
He said it is anticipated that the DAB and quantum experts will resolve the remaining matters before the end of the group’s financial year.
“We expect the final outcome to be published by the DAB before the end of the financial year. On receipt of this decision, either party may issue a notice of dissatisfaction with the ruling and refer the dispute to arbitration. However, such a ruling will remain enforceable unless and until overturned in arbitration,” he added.
Claim 6 for this contract covers events and circumstances that allegedly gave rise to the entitlement for an extension of time plus costs which occurred after December 2019. However, Claim 6 can only be dealt with once the Claim 5 entitlements have been resolved.
Turning to the Kusile Power Station SS-Izazi JV Package-28 dispute, Crawford said the contract was terminated by Eskom during February 2019 due to the power utility’s inability to provide access to the joint venture for it to complete the works.
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He said the engineer in August 2019 and April 2020 issued two negative final payment certificates, alleging overpayment for measured work and compensation events. This prompted the notification of many new disputes, which were then included in an adjudication process.
Adjudication hearings were conducted during November 2020 and February 2021.
Crawford said several disputes relate to the measurement of the works by the parties involved in an ‘independent quantum expert process’ to resolve these disputes.
“In order to accommodate this independent expert process, the parties agreed to stay the adjudication and requested the adjudicator not to publish his decision.
“Remeasurement of the works is complete and a final value for work done has been agreed. The group is confident that the final payment application is accurate and therefore no provision for overpayment has been made,” he said.
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Lack of public sector infrastructure
Crawford said there continues to be a lack of public sector infrastructure spend in South Africa but that the Department of Public Works and Infrastructure (DPWI) is considering several drastic measures to overhaul the way it manages, executes and oversees projects to address infrastructure project delays.
Minister of Public Works and Infrastructure Dean Macpherson announced these measures last month and reported that infrastructure project delays have cost the country almost R3 billion in the past few years.
Macpherson said that of the current 206 infrastructure projects overseen by the DPWI in this financial year alone, 164 are experiencing delays for a number of reasons – and represents an alarming 79% delay rate across its portfolio for this financial year.
Crawford added that Stefanutti Stocks continues to be affected through disruptive and unlawful activities by certain communities and informal business forums throughout South Africa.
However, Crawford said the DPWI and the Construction Industry Development Board convened a National Construction Summit on Crime-Free Sites in Durban on 19 November 2024, which was a significant milestone for the construction industry and a deliberate and determined response to eradicating extortion and disruptions on construction sites.
This article was republished from Moneyweb. Read the original here.
