Eskom is investigating how its team, mandated to negotiate a 5% price decrease in a multimillion rand maintenance contract awarded to the relative of former board chairperson Jabu Mabuza, came back with a recommendation to increase the price by R10-million.
Last week the Mail & Guardian reported that IDS Industry Service and Plant Construction Africa (IDS Africa), established by Nomvula Mabuza and a Croation, Drazan Vrca, had won a R100-million boiler tube maintenance contract for Medupi in February 2019. IDS Africa, which had been formed in April 2018, after a new Eskom leadership was appointed, was also in line for 70% of an R11-billion boiler tube maintenance contract. The contract was advertised within months of the company’s registration in 2018.
It is still not clear whether Nomvula had declared that she was a “distant relative” of Mabuza and whether Eskom had asked him about the relationship as part of its probity process — a norm when bids are being evaluated and adjudicated. Nomvula declined to comment on whether she had declared the relationship, which could create a conflict of interest, whereas Mabuza — through his chief of staff and Eskom — said he had no knowledge of Nomvula’s business dealings with the power utility.
The power utility on Wednesday said the inquiry, by an external investigator at the instruction of the new Eskom group chief executive (GCE), André de Ruyter, would cover all stages of the bid processes from evaluation and adjudication to contracting.
“The process to appoint an external investigator commenced last week,” a spokesperson in Eskom’s media room said. “The investigation will be fast tracked, because the GCE wants answers as soon as possible.”
Now, an internal submission to Eskom’s tender committee, seen by the M&G, shows that Nomvula, at a meeting at Eskom Facilities’ boardroom in February last year, told Eskom’s negotiating team that she had made a mistake and “omitted [an] additional zero on both [accommodation and transport charges] items”.
The addition of the zeroes took the original monthly rate for two buses over 36 months from R1 900 to R19 000 per bus, and accommodation for 30 people from R850 per person per month to R8 500 per person.
This added R9.5-million to the R72.5-million original tag for the contract. Together with contingency fees, value-added tax, a provisional sum of R13.2-million, and a 3.5% discount, the value of the tender ended up at R114-million.
The accommodation is for workers who are carrying out maintenance work at Medupi and must be transported to and from the plant.
A note on the approval of the negotiation outcome document says: “When IDS Africa indicated that they made a mistake on transport and accommodation, negotiation was stopped and the lead negotiator contacted the negotiation controller and informed him about the situation. Negotiation controller granted the team permission to continue with the negotiations.”
According to the submission: “[A calculation attached to the bid] showed that even if the negotiation should have taken place with the second lowest supplier and had got a discount of 7.5%, the current recommended supplier [IDS Africa] will still be the lowest.”
Eskom confirmed on Wednesday that other shortlisted bidders were not given an opportunity to amend their bids, as IDS Africa had done, but did not elaborate on the reasons for this or anything else to do with the contract.
The crippled state-owned power utility also said it was still investigating how of the 12-person negotiating team, only six attended the meeting.
When asked why, if IDS Africa’s prices were so low that they constituted a risk, as noted in the submission, Eskom’s adjudication and evaluation teams did not disqualify the company’s bid, the power utility again replied that this was also being investigated.
This anomaly also drew criticism from two procurement specialists who worked in senior positions in state-owned companies of a similar size to Eskom.
“In my time with the financial problems Eskom is facing, I would have insisted that they stick to the original bid price if it didn’t constitute a risk. If it does constitute a risk, then I would want to know how it got past our own specialists because it’s low-balling,” said one specialist.
The other said: “It is quite clear that this is done to advantage the service provider [IDS Africa]. The PPPFA [Preferential Procurement Policy Framework Act] says that all procurement must be fair and transparent, and denying other bidders the opportunity to better their bids is not fair.”
In a previous response to the M&G, Nomvula claimed that IDS Africa has “47 years plant engineering experience” — a direct contradiction to her company’s registration records. When questioned about the claim, she said the experience was through a “licensed partnership”, but never disclosed the specific partner.
A whistleblower has also reported IDS Africa to the Zondo commission of inquiry into state capture, accusing the company of fraud and corruption and alleging it to be a front.
Nomvula did not respond to requests for comment this week.
Her social media presence lists a whole lot of her interests, but makes little mention of her interest in engineering and her work through IDS Africa. In her LinkedIn profile Nomvula says she has worked as a risk and strategic business manager at Eskom. This is repeated in her profile on the National Youth Development Agency’s – where she was an executive director – annual report for the 2015 and 2016 financial year.
On her Facebook page she describes herself as a corporate risk specialist, business owner, Ms South Africa 2018, and a humanitarian.
Her mother, Princess Mabuza, is a safety manager at Eskom.
Nomvula is no stranger to controversy; she made the news in 2010 after it was alleged by civil servants in the co-operative governance and traditional affairs ministry that her spouse, then minister Sicelo Shiceka, had given her use of a state-issued Mercedes Benz allocated to the deputy minister. The vehicle was allegedly returned after the M&G asked questions about it. Nomvula and Shiceka denied she used the car, and government spokespeople said it was occasionally used as an escort car. In an interview with a local magazine in Mpumalanga, she said she met Shiceka while working at Eskom.