12 June 2019

South Africa: Commission Recommends Eskom Cancel Boiler Contract Over 0 Percent Black Ownership

The Broad-Based Black Economic Empowerment Commission announced on Wednesday that power utility Eskom failed to comply with the B-BBEE Act when it awarded a tender for a boiler at Duvha Power Station to a Chinese owned entity.

The commission said the Chinese company does not meet B-BBEE requirements. Subscribe to Fin24's newsletter here

"As a result, the commission has recommended to Eskom 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," it said in a statement.

A probe found that Dongfang Electric Corporation had 0% black ownership, the commission said. It recommended that Eskom should cancel the contract within 90 days and institute an independent forensic audit into the tender.

Fin24 could not immediately reach Eskom for comment.

'Direct violation'

In a summary of its investigation, the commission said that all state-owned companies must implement the requirements of B-BBEE policy when awarding tenders, unless they receive an exemption. The commission found no evidence that Dongfang Electric Corporation had received such an exemption.

"In processing and considering [the tender], it is apparent that Eskom and its Board had little regard, if any, to the B-BBEE requirements in that Eskom proceeded to award the contract in direct violation of its own procurement policy and procedure."

The commission said its investigation also found that Dongfang presented the highest price.

Source: Fin24

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