ABB replaces Alstom for $160m Eksom power plant contract

Posted on 7 Apr 2015 by Aiden Burgess

South African-based electricity company, Eskom, has terminated its contract with Alstom S&E Africa for the Control and Instrumentation (C&I) Works Contract for its new Kusile Power Station outside of Johannesburg.

The consensual termination is effective from April 17, and ends a contract with Alstom that was first established in 2011.

Eskom has now appointed ABB South Africa to execute the C&I contract for the Kusile Power Station.

The ABB contract is valued at about $160m, with ABB starting the C&I works from scratch, with the Kusile Power Station currently under construction at Eksom’s Emalahleni location in Mpumalanga outside of Johannesburg.

ABB was selected from two suppliers which were evaluated as part of an extensive procurement process executed in parallel with the negotiation and subsequent consensual termination of the C&I contract held by Alstom.

Despite the cancellation of its Kusile contract, Alstom will continue with its C&I works contract for the Medupi Power Station.

The cancellation has cost Eskom both extra time and money in regards to its Kusile plant.

On top of work already completed, Eskom has had to pay Alstom a cancellation fee of R40 million, with the cancellation of the contract also delaying the Kusile project by a year.

Eskom’s Acting Group Executive for Group Capital, Mr Abram Masango, welcomed the new contract arrangement with ABB.

“Eskom is looking forward to working with ABB in the execution of the control and instrumentation works, which is the brain of a power plant, at one of South Africa’s important projects Kusile,” he said.

“We believe that the procurement process that we followed will ensure a seamless transition and that it formed a strong basis for a competent supplier to deliver a quality product within agreed timelines.”

Kusile will be the fourth-largest coal-fired power station in the world and the largest dry-cooled power station in the southern hemisphere.

ABB is scheduled to complete Unit 1 of the Kusile plant by February 2016, with the last unit scheduled for completion by the end of 2020 at the earliest.