Stefanutti Stocks has secured cost of R110 million from Eskom for measured work, in addition to rulings by the Dispute Adjudication Board (DAB) since August 2021, associated to contracts it secured in joint ventures (JVs) for Kusile Power Station.
Russell Crawford, CEO of the JSE-listed building group, mentioned on Thursday that substantial variations are nonetheless being agreed with Eskom.
He mentioned the group has submitted provisional claims to the specialists after considering all funds obtained so far on the undertaking for:
- An overarching preliminary and normal price declare of R337 million; and
- A subcontractor overarching preliminary and normal price declare of R194 million.
He mentioned the intention is that the group will submit the remaining claims regarding building prices, commissioning prices and curiosity and finance prices to the specialists by December.
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In an replace on the Eskom Stefanutti Stocks Basil Read JV Package 16 contract – and particularly occasions or circumstances that occurred pre-December 2019 that gave rise to an entitlement to an extension of time – Crawford mentioned settlement has been reached by the specialists: on 49 964 days’ delay associated to access-related delays, and 23 208 days’ delay for construction-related delays.
He mentioned the DAB will shortly be engaged to difficulty interim selections on the variations between delay specialists on the commissioning-related delays.
The unique contract completion date was November 2016, however agreements had been reached to delay this to September 2021.
Crawford mentioned the group envisages that the DAB will difficulty its closing binding choice in the course of the second quarter of 2023, however careworn that both occasion has the best to attraction.
“At this stage, the group’s claims team is unable to quantify the value of the potential awards as the claims must follow due process. Therefore, these provisional claims have not been recognised in the financial statements,” he mentioned.
Alleged overpayments
The Stefanutti Stocks Izazi JV Package 28 adjudication proceedings commenced in June 2018 associated to 2 unfavourable closing cost certificates issued by the engineer in August 2019 and April 2020 alleging overpayments.
The adjudication hearings had been performed in the course of the months of November 2020 and February 2021 however the claims course of has not but been finalised.
Eskom in June 2020 alleged in a Kusile Power Station contract investigations briefing doc that “it had overpaid almost R4 billion to various contractors at the Kusile power station, including an estimated R1 billion to the two Stefanutti Stocks” JVs.
Other alleged overpayments highlighted by Eskom at the time included:
- ABB South Africa, Package 21A – R1 billion;
- Tenova Mining and Minerals SA, packages 24B, 24C and 24E – R735 million;
- Tubular Construction Projects, packages 11A and 17A – R1 billion; and
- Various web site service contracts not within the scope of the Special Investigating Unit (SIU) investigation – R180 million.
Comment was requested from Eskom on Thursday on the standing of the alleged overpayments to numerous contractors. Eskom referred Moneyweb to statements it issued on 2 June 2020 and 11 December 2020, including that it has “no further comments in this regard”.
Stefanutti Stocks is just not talked about by identify in both assertion.
Eskom Group CEO André de Ruyter mentioned within the first assertion that Eskom was working carefully with the South African Revenue Service (Sars), the SIU, the Hawks, “the JSE for those companies that are listed on the stock exchange”, and the pinnacle of investigations at the workplace of the National Director of Public Prosecutions.
The second assertion refers predominantly to an settlement by way of which ABB SA agreed to pay Eskom R1.56 billion in full and closing settlement of an overpayment dispute, regarding a contract unlawfully awarded by means of corrupt means for work at Kusile.
Recoveries from McKinsey, Deloitte and others
There are additionally temporary references to the restoration of cash from sure contractors, together with R1.1 billion from McKinsey and R171 million from Deloitte Consulting, and the R3.8 billion declare it had instituted in opposition to members of the Gupta household, Gupta associates, former Eskom executives and a former authorities minister.
The assertion mentioned additional investigations are ongoing in opposition to different contractors and suppliers, former and present Eskom staff, and different events.
Stefanutti Stocks has constantly disputed that it, or the JVs it was a part of, have been overpaid, which has resulted within the disputes being referred to the DAB.
Interim outcomes
Crawford mentioned on Thursday that Stefanutti Stocks delivered an improved efficiency for persevering with operations within the six months to end-August.
However, he mentioned the adjudication and award of tenders, particularly within the public sector – the place tender cancellations are frequent and it may take as much as two years for an award to be made – continues to affect the group’s efficiency.
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Crawford mentioned there may be at present an absence of public sector infrastructure expenditure.
“Over the past five years, revenue generated by the group from public sector work has reduced by 50%,” he mentioned.
Crawford mentioned the group additionally continues to be negatively affected by means of disruptive and illegal actions by sure communities and casual enterprise boards in sure elements of South Africa.
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He mentioned the main target of the group stays on decreasing the variety of loss-making initiatives.
In the reporting interval, of 158 energetic initiatives, seven declared an aggregated working lack of R19 million in comparison with aggregated contract income of R130 million, with 78% of contracted income executed at higher than tender margins in comparison with 59% within the prior interval, he mentioned.
The group on Thursday reported a 9.4% lower in contract income from persevering with operations to R2.9 billion from a restated R3.2 billion within the prior interval.
However, working revenue improved considerably to R54 million from a restated R9 million.
Crawford mentioned excluding restructuring prices of R22 million and irregular authorized prices of R6 million, the working revenue would have been R82 million at an improved working margin of two.9% from 2.7% within the prior interval.
The group’s headline loss per share narrowed to 25.02 cents from 67.12 cents.
It has an order guide of R6.3 billion, of which R1.6 billion pertains to work past South Africa’s borders.
Crawford mentioned within the brief time period there are potential awards to the worth of about R5.5 billion whereas future alternatives to the worth of about R69 billion have been recognized by the group.
Shares in Stefanutti Stocks rose 6.19% on Thursday to shut at R1.03 per share.
