Parliament must probe spiralling cost of Ingula Power Station

It is reported that Eskom's Ingula project has trebled in price from R8.9bn to R23.8bn. As a result, electricity consumers will have to fork out the extra money through more tariff hikes. 

I have today written to the Chairperson of the Public Enterprises Portfolio Committee, Peter Maluleke, to request a report on Ingula from Eskom to be tabled at the committee. I would also like more details on the tendering process and the credentials of one of the pivotal contractors for Ingula - PG Mavundla Projects, who has ANC Mayor Philani Mavundla as one of its directors.

Mavundla's businesses are seemingly a favoured beneficiary of government contracts. PG Mavundla Projects were allegedly a member of the joint venture involved in the controversial R700 million development of the uShaka Island project in Durban. Mavundla have also been reported as having had a role in a company called Rainbow Construction which was awarded a R129 million contract for the construction of the C-Max prison in Kokstad.   

The Ingula project may be yet another instance of a politically-connected company getting a lucrative Eskom contract and then failing to deliver the goods on time and within the agreed price. The other famous example is the building of the Medupi Power Station by a firm linked to the ANC's investment arm Chancellor House which is due to come in at R68 billion over budget.

The public will continue to pay inflated prices for electricity as long as Eskom allows its tender processes to be circumvented by companies connected to the ANC.

I have also written to the minister of Public Enterprises to ask whether penalty clauses for time and cost overruns are built into the Ingula contracts, whether they will now be invoked and what compensation will occur as a result.

If politically connected companies are not expected to adhere to timelines and financial limits of public contracts, consumers are likely to continue facing massive electricity price hikes.  

Deputy President Kgalema Motlanthe earlier this year admitted to parliament that politically connected firms should not be allowed to do business with the state. He made these remarks in relation to Eskom's provision of a boiler contract (in the Medupi Project) to Hitachi, which has a stake in Chancellor House, the ANC's investment arm. It is uncanny how prominently Eskom are involved in providing contracts to politically connected companies and how often these projects hit cost overruns. 

The DA will continue to do everything in its power to prevent politically connected companies from doing business with the state so that our economy can recover and ordinary South Africans no longer have to bear cost burdens they can ill-afford.

Statement issued by Natasha Michael MP, DA Shadow Minister of Public Enterprises, September 18 2012

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