South African court upholds Westinghouse appeal

10 December 2015

South Africa's Supreme Court of Appeal (SCA) has upheld an appeal from Westinghouse against Eskom's 2014 award of a contract for replacement steam generators for the Koeberg nuclear plant to Areva.

Westinghouse's legal challenge against Eskom's 2014 decision to award a tender for the six new steam generators, worth a reported ZAR 4 billion ($374 million), to Areva NP was dismissed by the South African High Court in March. The company filed a notice of appeal to the SCA against the High Court judgement in June, after Judge Zeenat Carelse granted leave to appeal. In its appeal, Westinghouse requested that Eskom's decision to award the tender to Areva be reviewed, and set aside, and that the SCA award the tender to Westinghouse.

In a judgement dated 9 December, the SCA ruled that Eskom had indeed acted unlawfully in the way it reached its decision to award the tender to Areva, by taking into account considerations that lay outside the criteria for the tender. This, the court said, made the award of the tender unlawful and procedurally unfair.

The two companies were told, on the last day of parallel negotiations prior to the award of the contract, that strategic considerations would be taken into account, but not what those considerations would be. The court documents note that the decision to award the contract to Areva was based on such considerations, including the existence of a three-month "float" or buffer period in Areva's bid, which were not part of the tender criteria.

The court has "set aside" the award of the tender and "remitted" the matter to Eskom for further consideration, but has not ruled that the contract should be awarded to Westinghouse as the company requested, saying that it would not be "equitable" to substitute Westinghouse for Areva in the contract. It noted that Areva has already started work under the contract. "This court does not know what the consequences of a substitution will be. And the 2018 deadline is looming," it noted.

The deadline referred to is Koeberg's planned 2018 outage, when the steam generators will need to be replaced. According to the court documents, Eskom had known since "at least" 2010 of the need to replace the steam generators at the two pressurized water reactors. The two Westinghouse-designed reactors, which came into operation in 1984 and 1985, were built by Framatome (now Areva).

Westinghouse is reviewing the SCA's decision to remit tender decision back to Eskom. "The finding that Eskom's Board Tender Committee unlawfully took into account so-called 'strategic considerations' is, however, to be welcomed," the company said in a statement.

Researched and written
by World Nuclear News