Construction World February 2015

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power line industry crisis BID TO AVERT

“We need urgently to sit together to develop a robust, competent and sustainable industry capable of delivering on the transmission Government to address the identified challenges of the industry in an effective and collaborative manner. > 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 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

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

Gary Whalley POLASA chairman.

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

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CONSTRUCTION WORLD FEBRUARY 2015