The widespread disruptions of building sites across South Africa originated in the construction of Eskom’s Medupi and Kusile coal-fired power plants, and these criminal organisations are now embedded in the utility.
Director at MDA Construction and Technology Attorneys Euan Massey told BizNews that the roots of South Africa’s construction mafias can be traced to Eskom.
Since construction began at Medupi and Kusile, extensive site disruptions have occurred. Payment disputes with contractors and from business forums in the local community resulted in substantial delays.
Medupi, in particular, was severely impacted. The coal-fired power station only began operating in 2015, seven years after construction began.
When fully operational, Medupi will be the world’s fourth-largest coal power station, with each of its six units producing 720MW.
Medupi is still not fully operational, with units 5 and 6 only operating at partial load due to design defects.
Following the disruptions at Medupi and Kusile, the government introduced new regulations in 2015 and 2017 to regulate the procurement processes in public sector construction projects.
These regulations created a legislative requirement – set out in the Preferential Procurement Regulations – that 30% of public sector projects must be subcontracted to local participants.
“This opened a door for illicit organisations to use site disruptions to extort money from construction firms under the premise that it is a government requirement that they be paid 30% of the contract value,” Massey said.
At the beginning of construction projects, these illicit organisations invade the site with heavily armed men to threaten individuals and halt operations until their demands are met.
Sometimes this turns into violence, with murder being commonplace.
Construction mafia inside Eskom
Electricity Minister Kgosientsho Ramokgopa previously said that organised crime with links to the KwaZulu-Natal construction mafia had infiltrated Eskom’s procurement division.
Ramokgopa described crime, corruption and sabotage as “a big, big part of the problem at Eskom”.
“Crime is inside the procurement division, extending into the cartels. The people who breathe life into these cartels are inside Eskom, especially in the procurement division,” he said.
“The fact that we can’t return the units back on time is because the procurement division prefers particular suppliers who don’t have the capacity to procure the components that are required.”
The National Energy Crisis Committee, led by Ramokgopa, is working closely with the SAPS and Crime Intelligence with a report back to the public to be done soon.
An operations centre has been established at Eskom with the technology to see what is happening at all power stations.
“It will be very difficult for someone in General Electric or Siemens to collaborate with someone in Eskom procurement because of their strict governance.”
“These are the components that are delaying the return of units. We want to do that rather than go through the supplier database because that is where the problems are,” Ramokgopa said.