Key Morupule B contract stuck in limbo

Brian Benza | Friday October 18, 2013 18:57

Sources close to the project told Business Week that negotiations for the O&M contract were supposed to have begun when construction of the project commenced in 2010 but the power utility is yet to respond to a proposal submitted by the Chinese company.

 After the construction contract, a substantive O&M agreement is supposed to be the next phase of the 600MW project, which will bind the Chinese company to operate the plant and transfer skills to BPC staff within the next two years. The proposed contract is also supposed to coincide with the Defect Notification Period clause in the first contract in which the Chinese company is obliged to provide remedial works and maintenance at no cost if the plant develops any fault within the first two years.

'CNEEC is currently operating the plant on a stop-gap agreement which will expire at the end of this month.

 I understand they were just told to operate the plant and negotiations will be done in retrospect. A substantive contract is urgently needed to facilitate skills transfer. Maybe BPC is waiting for the last unit to kick in but the delaying could prove to be disadvantageous to them,' said a source at the plant.

The corporation took over Units 1 and 3 in July and Unit 4 in September with the three units currently running at full capacity while remedial work is being carried out on the fourth (Unit 2). BPC spokesperson Spencer Moreri however said there is a contract in place between the corporation and the Chinese company although he declined to provide details citing confidentiality reasons. Following the completion of the construction of the plant, staff complement at the plant has been reduced from over 3,000 to just 600.

The Chinese number of workers has been reduced to 350 from 1,800 at the peak of the project while Batswana workers have also been trimmed from 1,300 to around 300 as well.

 While the number of expatriate workers has been significantly reduced, the source said BPC should promptly place its staff into key positions for training to replace the Chinese workers.

'In the control room where the plant's full operations including boilers, turbine, coal conveyors are monitored and controlled, the staff complement there of about 20 workers is all Chinese. I doubt the skills would have been transferred during the proposed two year O&M contract. It will take more time than that,' said the source.However, BPC says its staff should be fully running the plant in the next two years.

'The corporation has Batswana employees attached to Morupule B project and efforts are well underway to secure further training of Batswana to operate the power station by end of 2015,' said Moreri.

Early this year, Minster of Minerals Energy and Water Resources Kitso Mokaila announced that government had engaged an international consultancy firm, Norton Rose as legal advisers to address the contractual matters as well as the operation and maintenance contract for seven months.

Addressing Parliament two months ago, Mokaila also said that BPC and the contractor were intensively negotiating the operations and the maintenance agreement. According to the  financing structure  of the project, the AFDB has provided $1.3 million for the training of BPC staff.