Issues raised during the joint oversight visit to Koeberg Nuclear Power Plant: NUM & Eskom input

Meeting report

Opening remarks

Co-Chairperson Luzipo welcomed the Members from both Portfolio Committees and the National Union of Mineworkers (NUM) representatives and Eskom to the meeting. The meeting was scheduled for 09:00am to 12:30pm, but Parliament had scheduled a debate at 11:00am, which meant the meeting would have to be concluded by 10:30am to give Members enough time to prepare for the debate in the National Assembly.

The meeting was a continuation of a previous meeting between the Joint Committees and Eskom at the Koeberg Power Station, where some issues were not resolved due to time constraints.

The Joint Committee would receive a recap of the issues raised in the previous meeting and some of the new developments that had arisen since then. Eskom would reply by giving an update on its response to the issues raised by the NUM, including questions and issues requiring clarity that were not responded to during the oversight visit.

 NUM recap on issues raised at Koeberg Power Station

Mr Phumzile Mvovo, Western Cape representative, NUM, said it seemed like yesterday when the NUM were on their management`s case when they saw a huge exodus of their nuclear plant licensed operators. They made a serious noise about this in their Business Unit Forum (BUF) meetings. It took management long to respond to their concerns, to the point where they had been left with one extra operator to carry on producing electricity.

The NUM believed that the Koeberg power station was at grave risk of forced shutdown because production was prioritised above nuclear safety by deferring the last unit 2 Steam Generator Replacement (SGR) project. Anyone who put production over and above nuclear safety had no place in the nuclear business at all. The decision to defer the SGR replacement on unit 2 had put the station and the people at risk. The NUM understood that there was a real risk of people losing their jobs if the station could not be maintained, or if it ended up being shut down prematurely.

Framatome had been appointed as a contractor under very questionable conditions, while Westinghouse was the preferred company from a technical point of view. After Westinghouse challenged the awarding of the tender to Framatome (AREVA), Eskom had made a justification at the Constitutional Court that the real reason was because Framatome would be able to meet the project timelines. The Constitutional Court had stated that the appointment of this contractor was justified, as FRM was the only company that indicated they could deliver the project in 2018 -- but four years down the line, the steam generators were still not installed.

In 2016 Eskom knew, or it became apparent, that steam generators (SGs) would not be delivered before 2021, and during the manufacturing of the SG shells, one was dropped and got badly damaged; as a result, the shells had to be scrapped. Six months before the x25 outage, a readiness assessment was performed in accordance with KLA-023, and it was reported to the BUF that 125 would not be met by the project as a result of the contractor’s design, safety case and site work packages (installation documents) not being completed and accepted by the National Nuclear Regulator (NNR).

The original project’s optimistic simulation showed that early July would be the date that the unit could be synchronised. It was a surprise that the decision was made to defer to a next outage, and after this decision, the project team was blamed for the deferral in what was termed as a heated, confrontational meeting. It was this grievance that made the NUM aware that not only was the deferral of the project putting the station at risk, but it was going to cost about R1 billion in compensation events. Some NUM members were put under enormous pressure to pay Framatome two payments that they did not agree with.

He said the NUM needed an in-depth investigation on these issues and was hoping that the Joint Committee would assist in moving forward with the issues.

Co-Chairperson Luzipo asked the NUM to forward their presentation to the Committee Secretary so it could be forwarded to the Members of the Joint Committee.

Mr T Langa (EFF) asked if Eskom would present the report submitted at 08:30am.

Mr Lebohang Tekane, Parliamentary Liaison Officer, Department of Public Enterprises (DPE), said a presentation was circulated to the Joint Committee at 08:30am, but the report was circulated last week. Both the presentation and the report contained the same information.

The Committee Secretary confirmed that the report was received last week and circulated among the Members of both Committees.

Mr Langa said receiving presentations on the morning of the meetings caused confusion, because Members must be afforded enough time to read through them to ensure that the content of the presentation was like the information on the reports.

Co-Chairperson Luzipo said some entities tended to provide a report and a presentation that summarised the report's content, and noted Mr Langa’s concern.

Eskom’s response

Prof Malegapuru Makgoba, Eskom Chairperson, understood that Eskom was meant to respond to the NUM's outstanding issues pertaining to the Koeberg power station. The Eskom team would be led by Mr Andre de Ruyter, the Group Chief Executive Officer (GCEO) and his team, and they would address the issues that the Joint Committee had raised.

Mr De Ruyter said the presentation would summarise Eskom’s response to the NUM, and its content was the same as the content in the report submitted last week. He said they had endeavoured to respond to the issues raised by the Joint Committee in the previous meeting, including the issues raised by the NUM Members. He asked Mr Keith Featherstone, the Chief Nuclear Officer, to respond to the NUM issues.

Mr Featherstone said the steam generator replacement project was a critical enabler to the life extension of the Koeberg power station for an additional 20 years beyond its original generation life. The scope of refuelling Outage 225 on Koeberg Unit 2 was originally intended to include the replacement of the steam generators on Unit 2.

However, Eskom had to remove the project from Outage 225 due to several serious deficiencies in the front-end loading of the project, which would have caused significant delays to the outage which Eskom and the country could not afford. Both Eskom and the contractor had contributed to these deficiencies, and there were several associated disputes between Eskom and the contractor which were subject to dispute adjudication. An example cited by the contractor regarding Eskom’s role in contributing towards the project not commencing as scheduled included that the facilities which were required to house the old steam generators, once removed, were not ready for use.

Eskom management had identified poor project management, inadequate contract management, and a lack of financial discipline -- including an instance whereby no provision was made for a R650 million order against Eskom by the Constitutional Court -- as being contributory factors towards the project not commencing as scheduled. The Generation Board had initiated an independent investigation into this matter, which was expected to be completed by the end of September. While the outcome of the investigation would assist management in determining remedial and consequence management actions to be taken, thus far, three senior employees have been placed on precautionary suspension with full pay.

Removing the steam generator replacement work scope from the outage scope required the outage to be completely re-planned, and additional scope had to be added to inspect and maintain the existing steam generators. This resulted in a scheduled outage plan with a duration similar to the original plan. Unfortunately, during the start-up phase, after completion of all the maintenance and project work, emergent technical issues resulted in a delay in the return of the unit to service, which happened on 7 August.

The delay in Outage 225 led to an increase in load-shedding, and was a key component of the Stage 6 load-shedding, because the delay in the return to service of the unit coincided with peak demand during the winter season. If the steam generator replacement had not been withdrawn from the outage, based on the schedule tabled by the contractor, load-shedding would have lasted much longer. The steam generator replacements were now scheduled for Outage 126 on Unit 1 (starting in December) and Outage 226 on Unit 2 (starting in October 2023), which would not compromise the Long-Term Operation Licence application, but it would significantly increase the work scope in the two outages.

Mr De Ruyter said that in May 2000, Eskom Holdings had entered into a collective recognition agreement with NUM, the National Union of Metalworkers of SA (NUMSA) and Solidarity, to regulate their mutual relationship. This was in accordance with the provisions of the Labour Relations Act (LRA), and the parties in the recognition agreement had committed to its provisions, to cooperate in the spirit of mutual regard and respect, and to continually promote sound industrial relations through good faith bargaining, consultation and information sharing.

In the normal course of events, the issues raised by NUM at Koeberg were supposed to have been addressed through the Koeberg Business Unit participative structure. The reason there were participative structures in place at different organisational levels was to ensure that matters were addressed at an appropriate level by the appropriate management, and that there was proper escalation and coordination of matters. It was, therefore, regrettable that NUM had chosen not to utilise the appropriate participative structures but had exploited the presence of Parliamentarians at Koeberg. The matters should be redirected to the appropriate business forum for engagement.

Mr Chris Baloyi, Head of Forensic Investigations, Eskom, presented the whistle-blowing policy of the organisation. The purpose of the policy was to set out the principles governing the disclosure of unlawful and irregular conduct by Eskom or its employees, and to protect those who disclosed in good faith and a responsible manner. In compliance with the Protected Disclosure Act, Eskom had established an independently managed and toll-free fraud hotline and email where stakeholders, including employees, could report known or suspected fraud, corruption, and financial and general irregularities without disclosing their identities.

The Forensic and Anti-Corruption Department was established in terms Treasury Regulation 33, and it reported functionally to the Audit and Risk Committee and administratively to the GCEO. Whistle-blowers' identities were always protected and not shared with management, and management had no influence on the work of the Forensic and Anti-Corruption Department.

Employees were continuously encouraged to report fraud and corruption anonymously, and reference numbers were issued for follow-up purposes. A whistle-blower was not required to consult with anyone prior to reporting. The department was the custodian of the policy and facilitated the protection of whistle-blowers if any victimisation or threats of physical harm against employees who made protected disclosures were reported.

Mr De Ruyter said they had not been provided with the submission made by the NUM prior to the meeting, so they would have to study it and then determine their response. They were pleased that NUM had agreed that the Koeberg power plant was a national asset and the extension of its lifetime was of critical importance. The NUM member in question, who was the grievant who raised the allegations, was the Contract Manager and the Project Manager of the SGR project, so the accountability for the delivery of the project rested upon him.

During a meeting of the Eskom Generation Board dealing exclusively and specifically with the SGR project, it became apparent to the board that the project had been poorly managed and there were several inefficiencies in basic project governance control measures. For example, maintaining an adequate claims register and managing claims by acknowledging and rebutting them severely compromised Eskom’s position regarding the defence of the claims.

Eskom was unaware of the insinuations made by the NUM representative that there was collusion between the Executive and the contractor in question. If there were any evidence of this, the grievant was duty bound to raise the issue through Eskom's whistle-blower facilities. “Merely making vague and embarrassing allegations simply was not enough to absolve a senior manager of accountability for underperformance,” he said.

It was quite unusual that a senior manager had used the offices of a trade union to represent them when they were held accountable for underperformance, and did not use the internal structures created for the sole purpose of protecting them -- and had even gone as far as involving Parliament. The suspended individuals did not suffer any prejudice, as they were suspended with full pay while the investigations were ongoing. He said Eskom would be happy to share the outcome of the investigations with the Joint Committee.

Discussion

Ms J Mkhwanazi (ANC) asked if the NUM had exhausted all the internal structures within Eskom before escalating the matter to Parliament. If so, what had been the feedback from the internal structures? If not, why did they not report the matter to the internal structures? When the Joint Committee visited Koeberg in April, the NUM had strongly raised an issue over the Nuclear Operation Licence, and Eskom had to comment on the progress of the licence. She also wanted to know the merits, progress and costs of the eight investigations held at Eskom. What was Eskom doing to prevent the recurrence of Stage 6 load shedding, because it was very inconvenient and painted a bad picture of government?

Mr K Mileham (DA) said Eskom’s presentation spoke to the original cost estimate for the update of the SGR project being R20 billion in 2010. What was the current estimated cost of the life extension project? Was a new business case submitted for the life extension project? If so, what was the progress of the business case? In the life extension project, surely the non-replacement of the SG units in outage 225 had a knock-on effect on the overall timeline. What was the impact of the knock-on effect?

In the presentation, Eskom said it could spend up to R2.4 billion per month on the cost of diesel for the open cycle gas turbines (OCGTs). Was Eskom budgeting for that maximum or a different amount, noting that their recent report stated that they had run out of funds to purchase diesel in the current financial year?

Regarding the President's announcement, he said the presentation from Eskom stated that the National Electricity Crisis Committee (NECC) worked under the President. Since it was a Presidential initiative, the documents generated by the NECC were classified as secret. When the President made the announcement, he said it would be done openly and transparently. How did this align with the documents of the NECC, which seemingly accounted to nobody? 

Ms R Komane (EFF) did not see any problem with the NUM escalating their grievances to Parliament for intervention, because they were exercising their democratic right. She wanted to know how far the process of acquiring the nuclear licence was. Having heard that there were people on paid suspension at Eskom, she said it was unjust to have people suspended for a long period, whether they were paid or not, and the processes must unfold. She wanted to know how long the people were suspended, the status of the investigation process and when it would be finalised. What was the status of the SGR project, given that there were no funds for it in the current financial year? Did Eskom submit a plan on how they would proceed with the SGR project?

Mr M Mahlaule (ANC) wanted to know if it was true that the team of engineers that came to South Africa to do maintenance at Koeberg had left because Eskom was not ready, and they had charged Eskom over R1 billion.

Mr Langa said during the oversight visit to Koeberg, the Joint Committee was told that two units had about three steam generators each, equalling six steam generators to the value of about R5 billion that had to be installed. How far was Eskom with the installation process? Would the commissioning of the steam generators provide relief to Eskom’s electricity supply challenges?

Mr M Wolmarans (ANC) wanted to know the current status of the nuclear plant operators, considering that Eskom lacked capacity or experience in that field.

Mr F Essack (DA) asked how far Eskom was in planning with the Komati Power Station and what would happen to the individuals who ran the risk of losing their jobs, as that would have a grave impact on the people of Komati. There were also reports that there were about 19 units on unplanned outages, and some were supposed to be back online in September, some in October. Was Eskom on track to getting those outages back online, considering it was nearing the end of September? How many of those outages would be online within the next two weeks?

Mr S Gumede (ANC) was concerned about the discussion of internal disputes within the work environment, as Eskom faced many challenges. He asked how much the coal project cost, and how much had already been paid to the contractor. Was the payment made to the contractor commensurate with the work done?

Ms T Malinga (ANC) took offence to Mr De Ruyter’s comment that the NUM was not supposed to escalate their issues to Parliament. What was wrong with the NUM elevating their issue to Parliament, because Parliament oversaw state-owned entities (SOEs)? She proposed that the Joint Committee dedicate a day to go and investigate the situation at Koeberg, including the issues cited by the NUM, and whether the responses given by Eskom were true.

Ms P Madokwe (EFF) said the NUM had raised their issues internally at Eskom, which was their reason for escalating the issues to Parliament. Eskom should have responded to the issues raised because they had been raised multiple times, including during the oversight in April, and the previous Joint Committee meeting. One of the important issues that had been raised was the exodus of experienced engineers, which needed to be considered by Eskom because the country was facing an energy crisis. She asked if Eskom was indeed losing out on scarce skills, and whether there was a plan to retain them. Were there initiatives to train young people in some of the scarce skills to fill the gaps that were lacking at Eskom?

The energy crisis issue concerned everyone in the country, and Eskom was the custodian of the energy issue and should be able to account for everything in that regard. “There should not be any information that was deemed as classified, and South Africans deserve to be told about the developments concerning dealing with the energy crisis as regularly as possible”, she said. She also supported Ms Malinga’s suggestion to visit the Koeberg Power Station.  

Co-Chairperson Magaxa said it was not wrong for the NUM to approach the legislative arm of the state when they had any matter that they thought was important and affected the public. The whistle-blowing process should not be bureaucratised, and anyone who felt unsafe reporting an issue within their work structures had a right to go to other avenues where they would feel protected. The aim of the process should be for individuals to feel free and protected from intimidation and isolation. “The fact that some of the people who spoke up on their issues within Eskom got suspended shows exactly that even if they had used the internal whistle-blowing avenues at Eskom, they would have still lost their jobs”, he said.

He asked why the Koeberg SGR project was suspended. Eskom had informed the public that it was not ready for the project, whereas the NUM reported that Eskom was protecting the contractor that failed to deliver on its contractual obligations. The Joint Committee wanted to know more about those issues, and Eskom should have spent time trying to convince the Members against the allegations by the NUM, rather than directing them elsewhere to receive such information. What was the total cost of the SGR project, and how much was paid to the Framatome contractor? What work was done for the payments made to the contractor?

South Africa had been forced to launch an Independent Power Producer (IPP) purchase programme for about 1 000 megawatts because of load shedding, whereas Eskom had decided to suspend the maintenance of Koeberg to August 2024, and the Joint Committee was recently told that the licence would also end in 2024. There were a lot of public allegations that there was an agenda of moving away from nuclear energy and prioritising IPPs at Eskom with particular economic interests. This also raised the suspicion that Eskom was waiting for 2024 so that the licence would expire and Koeberg would be closed. This was also depriving the country of 920 megawatts of power, and the situation in the country would not be where it was if the 920 megawatt Units were operating.

Co-Chairperson Luzipo said this was a matter of national interest and should not be looked at as a commercial transaction. The focus should not have been on the whistle-blowing issue, but rather on the energy crisis. There were already allegations circulating around the country and the media that there was a deliberate attempt to sabotage the supply of energy in the country.

He said everything that Eskom did in the past few months was suspicious, because the person who had led the Joint Committee’s oversight tour at Koeberg was the same person that was said to have been suspended subsequent to the visit by the Committee. It was impossible for Eskom to expect the Committee to believe that the person was incompetent when nothing like that was even hinted at during the oversight visit.

The report from Eskom did not speak of any solutions to the problem of incapacity, which also raised more suspicions. He supported Ms Malinga's suggestion that the Joint Committee would need a full day to visit Koeberg and investigate everyone on issues that were raised regarding policy and operations there. The issue raised by the NUM was that as much as Eskom wanted to deal with policy issues and directives, there was an operational crisis that they were not dealing with, and they did not mention how Framatome had entered the contract with them and how they had ended up in the Constitutional Court. They also had not revealed what happened between them, Framatome and other contractors in the initial bidding process. “If Eskom wanted the Joint Committee to reduce the issue to labour relations, it would be a disservice to the actual argument, because this was not a labour relations matter”, he said. 

Response by Eskom

Prof Makgoba agreed that this was much deeper than a labour relations issue. It may be important for the Joint Committee to visit the power plant, probe the issues pertinent in the daily operations, and reach its own conclusion.

Mr De Ruyter agreed that the matters raised by the Joint Committee deserved more time, and assured the Members that Eskom fully respected the rights of any citizen of the country to approach Parliament on any matter they saw fit. He said more time was needed to discuss the matters raised, and stressed that Eskom was pro-nuclear; otherwise, they would not be pursuing the life extension project. He supported the proposal made by the Joint Committee to spend a full day at the power plant.

Concluding remarks

Co-Chairperson Luzipo said the Joint Committee should agree to be guided by the Secretariat and by the instruction from the Office of the Speaker of the National Assembly, through the National Assembly House Chairperson, that they would deal with the issues as part of the work of the instruction to look at the overall energy crisis, and report back to the Speaker’s Office. This would include the full one-day visit, and also be based on the discussion in the meeting. The research teams and content advisors of both Committees would have to prepare specific areas of focus that would not only be related to Koeberg.

Co-Chairperson Magaxa agreed.

Mr Mileham said this was the second meeting that had been adjourned without the questions of Members being answered, and wanted to know when they could expect answers to their questions.

Co-Chairperson Magaxa said this would be considered an ongoing process, and not the end of the session. The trip to Koeberg would be enough time for all the Members' questions and concerns to be answered.

Co-Chairperson Luzipo said the visit to Koeberg would now be investigative in nature, and would be different from the normal oversight that the Joint Committee had undertaken in April.

Mr Langa pleaded to Eskom that they treat the Committee Members like legislators during their visit, especially because their last oversight visit in April had not been pleasant.

Co-Chairperson Magaxa thanked the Members of both Committees and the delegation from Eskom and NUM for availing themselves for the meeting.

The meeting was adjourned.