Construction World February 2015

CONSTRUCTION WORLD

FEBRUARY

2015

MARKETPLACE

“We need urgently to sit together

to develop a robust, competent

and sustainable industry capable

of delivering on the transmission

requirements of the country and the region

while protecting skills and jobs,” says Gary

Whalley POLASA chairman.

Whalley says that the transmission line

industry in South Africa is at a critical point

in its evolution in relation to the Eskom

Transmission Build Programme (TBP). “The

industry is in crisis having suffered signif-

icant job losses in the past few years and

with up to 5 000 jobs shed in the last twelve

months,” he says.

He adds that the power line industry

supports the Eskom TDP in the short

and medium term, with the vision of

becoming part of the transmission inte-

gration aspirations of the Southern African

Power Pool and ultimately the NEPAD devel-

opment goals for Africa.

“In short we need to find a way of

meeting the challenges of providing the

necessary infrastructure for: a reliable

transmission grid; increased transmission

capacity; expansion of the grid in support

of ‘electricity for all’; unlocking identified

development areas; and regional integra-

tion as defined by Eskom in its Transmission

Development Plan (TDP) within the context

of the Presidential Infrastructure Coordi-

nating Committee’s (PICC) defined goals

contained in various Strategic Integrated

Projects (SIPS),” says Whalley

The local power line

industry – the burning

platform

The local power line industry is com-

prised of 11 contractors currently under-

taking construction projects (or recently

completing projects), supplemented by

three contractors not currently active on

new build projects. The industry employed

about 6 000 construction personnel and

constructed 737 km of new lines in financial

year ended 31 March 2013.

“However,” says Whalley, “the comple-

tion of many of the mainstream Eskom jobs

and the fact that in the current environment

there is no new work coming on stream, the

industry is on a ‘burning platform’”.

He adds that the hampering of new work

coming into the market and the failure to

identify and properly address the conse-

quent challenges has already produced well-

nigh catastrophic results.

For example, a number of well-known

South African companies have in the recent

past been forced into liquidation or busi-

ness rescue programmes: These include

Transdeco GTMH – voluntary liquidation;

Edison Jehamo Power (now Symbion PNC)

– business rescue; Towertel trading as Optic

1 – liquidation; Umakho Power – business

rescue then liquidation; Linear Power – liqui-

dation and AC Towers – liquidation. In addi-

tion, Stefanutti Stocks recently announced

their intention to close down their transmis-

sion line construction operations.

Whalley estimates that, based on a

premise of about 300 jobs per 100 km of

line under construction, direct job losses

that have eventuated from the drop off in

volume of work is between 4 500 and 5 000.

“This does not take into account associ-

ated industries such as transport, plant hire,

conductor, insulator, line hardware, fuel,

concrete, reinforcing and tower steel supply

all of which have already been impacted by

the lack of demand.

“Moreover the very limited number of

projects identified for issue to the market

in the next six months could result in a loss

of industry participants, either to foreign

markets or, for smaller local contractors,

through business failure. This eventu-

ality would further constrain the indus-

try’s capacity to deliver the required kilo-

meters identified in the TDP,” says Whalley.

Policy contributing to

lack of work

Several policy areas are contributing to the

hampering of work for the industry. These

include:

site access

– where the current

regulatory environment within which servi-

tudes are identified and secured is onerous

adding a component of time to the project

cycle;

landowner

– where landowner’s resist-

ance to accepting servitudes across his land

has been bolstered by a more complex legal

framework and an increasing inclination to

the litigious approach to conflict resolution;

community unrest and demands

– where

an increasing pressure on service delivery

has resulted in community pressure on

line route access. Community actions have

even included violence toward both Eskom

and contractor personnel as well as the

destruction of equipment and infrastruc-

ture;

environmental approval

– where the

Environment Impact Assessment/Environ-

ment Management Plan/Record of Decision

process has added significant time to the

project cycle;

permit requirements

– where

evolving legislation results in unexpected

requirements that are identified late in the

project process and result in work stoppages

or an inability to commence work at all; and

’Compact’

– where Government signs an

annual ‘Compact’ with Eskom to construct

a target amount of kilometers of line per

annum. Yet, it is processes within Govern-

Continued on page 6

power line industry crisis

BID TO AVERT

Gary Whalley POLASA chairman.

In a paper recently presented

to the industry and

representatives of Eskom,

Southern African Institute

of Steel Construction

(SAISC) affiliate, the Power

Line Association of

South Africa, POLASA, laid

out a plan for engagement

between the Power Line

Industry, Eskom and the

Government to address the

identified challenges of the

industry in an effective and

collaborative manner.