Blame-storm shakes Morupule B

Brian Benza | Friday March 7, 2014 17:32

 

With the 600MW project nearly 18 months overdue, two of its units down with faults and the other two at only 80% capacity and government due to spend another P1.5 billion on the BPC’s maintenance and operational costs this year, the meeting was critically due.

Ahead of Mokaila’s meeting with Chunsheng, however, the minister hinted at the breakdown of the six-year relationship between government and the China National Electric Equipment Corporation (CNEEC) over Morupule B delays and costs.

Signs of cracks in the relationship showed last year when Mokaila told BusinessWeek that government was perusing its October 2008 contract with CNEEC.

In December, government ended CNEEC’s interim operation and maintenance contract and handed it to a German firm, citing impossible demands from the Chinese in talks for a substantive deal.

In a fiery debriefing to captains of industry on Tuesday, Mokaila vowed to enforce government’s legal recourse in the October 2008 contract, revealing that the state still holds the bond over the deal.

“On paper they were good, but their execution was the problem,” Mokaila said of CNEEC.

“We are currently setting up a performance management office in the ministry to deal with those who do not do right with us. We want a return on our investment.”

Mokaila added: “That’s what is going to happen.

I don’t see it working any other way. When people don’t make the right decisions, they must be held accountable.”

The minister revealed that a root cause analysis commissioned by government last year had shown that CNEEC did not follow design specifications from French and German consultants for certain components in the boilers of all four units at Morupule B.

“Everything has been delivered, but it is not working and the root cause analysis is that some things were not done to spec,” Mokaila charged.

“When the root cause analysis was done, it showed that according to those who designed the boilers, certain components were supposed to be movable and that’s why they are fracturing. “We are re-modifying units two and three and if successful, we will do the same with units one and two after winter.”

In contrast to Mokaila’s passion before business leaders on Tuesday morning, sources present at his afternoon meeting with Chunsheng, paint a picture of civility in the midst of strife, between the two parties.

“The meeting between our president and minister Mokaila was very cordial in which both parties worked to ensure that trust is restored.

The president assured the minister that CNEEC will deliver the completion of the project and will support BPC until full generation from the plant,” said the source.  

CNEEC insiders on Wednesday told BusinessWeek that the Chinese contractor had conducted its own root cause analysis proving it was not to blame for Morupule B’s woes.

The insiders said the two parties had agreed that the BPC would engage a consultant for an independent root cause analysis in a few weeks time, which would then point to the action to be taken.

“As far as we are concerned we fulfilled our obligations in the contract and followed the design specifications.  Our own root cause analysis revealed that CNEEC is not to blame for the leakages so we shall now wait for the results of the independent evaluation by a third party,” said the insider.

The CNEEC insiders spoke of their powerlessness to defend themselves to growing public attacks from their government partners. CNEEC officials say the Chinese firm has thus far lost about P300 million due to the delays in Morupule B’s completion.

 “The project has been delayed for about 18 months now and we have incurred out of budget costs of over 20 million a month.

We will not make any money on this project; In fact we are going to make a huge loss.

But our president has said that despite the losses we should make sure we deliver the project and bring it to completion,” he added.

CNEEC currently has 120 Chinese and 200 locals working on the site. Other sources close to the Morupule B saga told BusinessWeek that it would be difficult for government to find legal ground and blame the power station’s woes solely on the Chinese contractor.

“Even the minister has acknowledged the number of oversight bodies involved in the project which included government, the consulting engineers, AfDB, ICBC and World Bank,” the source said, requesting anonymity due to the sensitivity of the project.

“Each stage of the project was monitored, tested and passed before hand-over with all parties agreeing that everything was done according to spec.

“It will not be so simple to pass the blame solely onto CNEEC even though it appears that’s where the buck stops.”

Other CNEEC officials pointed to the cordiality of Tuesday’s meeting as proof that both parties were willing to work on their professional relationship and trust, for the sake of delivering reliable electricity to Batswana.

In addition, a February 18 meeting in Beijing between Chunsheng and Botswana ambassador, Samara George, also ended with calls for ‘mutual understanding and close cooperation’.

However, the advent of winter with forecast peak national demand of 680MW against the current peak of 580MW, means the heat is on within the government enclave to apply pressure on the contractor.

“We should have been absolutely self-sufficient by now and not in this situation.

You must understand that we are putting the contractor under pressure to meet the contract’s requirements or else.

“I hope you understand what that means,” Mokaila said.