Chairperson, it will be necessary to preface this report by sharing with this House the magnitude of the infrastructure project that the portfolio committee strategically undertook to carry out oversight on.
The Medupi Coal Power Station is the largest construction project in the southern hemisphere. There are 38 contract packages with more than 300 contractors and subcontractors, with the project being valued at R105 billion. There are six coal power-generating units which will produce a total generating capacity of 4 800 megawatts. The plant will have greater efficiency than the existing Eskom power plants and will be the largest dry coal power station in the world. It is one of the biggest projects in the world currently.
Given the scale of the project, it is rendered vulnerable to different sets of risks that may lead to delays. Some of these have been experienced during the implementation process. The report raises several challenges and we need to note the following actions that have been taken to address them.
Eskom and the Minister of Public Enterprises have made several interventions to minimise further delays in the project and are working closely with the management of the main contractors to ensure that they bring in more experienced engineers and technicians, and put in extra hours. Eskom has implemented the conditions of the contract with regard to performance guarantees by calling on the bond on Eskom. In addition, subcontractors who have been found to have violated contracts and undertakings have been handed over to law enforcement agencies.
The bond on Hitachi has not been called as Eskom is still finalising an appropriate and severe penalty. Work stoppages have been successfully resolved. The Medupi Legacy Project is one of the most important projects for addressing economic growth, employment creation and improving the lives of our people. The Medupi legacy project is a cornerstone of the supplier development and localisation efforts. The project has set objectives such as a well-co-ordinated and integrated programme ensuring that Eskom leaves a sustainable legacy in the Lephalale municipal area and the Waterberg District Municipality and contributes to Limpopo's provincial gross domestic product.
Eskom alone has procured R202 million locally, with 70% of the procurement from companies owned by black women. Contracts worth R1,67 billion have been placed with Lephalale and Waterberg-based suppliers. Eighty per cent of the employees of support services companies are women. Eskom procurement- related procedures cover supplier development and localisation, where targets are included in the contracts and, as such, monitored for compliance. Targets cover broad-based black economic empowerment, black women-owned, black youth-owned, local procurement and skills development.
With regard to job creation, onsite employment as at March 2013 was 16 800 people. Forty three per cent of the workforce is people from the Lephalale area; 72% of unskilled and semi-skilled workers are from Limpopo province; 95% of the workforce is South African; 53% of the workforce are youth under the age of 35 years; the project site currently has 1 080 women; and 59 people with disabilities are employed by the contractors.
The build programme has been used to contribute to skills development and to facilitate manufacturing capability in South Africa. The Eskom contractor academy has witnessed 38 business owners graduating and 15 who are currently undergoing training. The graduation ceremony is convened by the University of Limpopo.
Contractors have committed to training 2 128 skills development candidates. The objective is to train skilled people who can be employed either on site or in the Lephalale municipal and traditional authority areas. Together with the Department of Basic Education, the project has hosted approximately 1 500 learners annually, wherein young professionals at Medupi share the career opportunities in the construction, engineering and project management environment.
A boiler manufacturer has invested R24 million in the Tlhahlong Training Centre. With regard to infrastructure development, Eskom has invested more than R40 million in sewerage and electrical distribution systems in Lephalale. Eskom is building and renovating seven rural clinics, and also funding six mobile schools, as well as teachers and equipment. Furthermore, Eskom has spent R2,3 billion on housing in Lephalale since 2007.
Whilst detractors have raised a number of issues, let the facts on how the project has dealt with challenges speak for themselves. We table the report for consideration. Thank you. [Time expired.] [Applause.]
There was no debate.
Hon Chairperson, I move:
That the Report be adopted.
Motion agreed to.
Report accordingly adopted.