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Desalination contractor to sue City

The temporary emergency desalination plant at the V&A Waterfront will no longer be in operation following the decision by contractor Quality Filtration Systems (QFS) to terminate their contract due to an alleged outstanding payment of more than R20m, owed by the City of Cape Town. 

Moreover, QFS director Musa Ndlovu on Monday confirmed that the company will be suing the City for the full contract value of R53m plus damages.

“That is the only recourse left for us,” she says.

QFS was awarded the tender on 8 January 2018 for the establishment of a desalination plant to be operated by an experienced water treatment specialist team, for a period of two years. The plant came into operation in May 2018.

Following a failed confidential mediation process, the company revealed their intention to take legal action on the premise that the City was aware that the seawater was of poorer quality than just mere seasonal fluctuations, before the tender was awarded, information they had uncovered soon after starting operation. 

Public activist Sandra Dickson from Stop COCT, who has been monitoring the process closely and is in contact with QFS, explains why it is not viable for the company to continue to run such an expensive operation at the Waterfront plant. 

“The plant was designed according to the specification in the tender, which was merely making provision for general seasonal fluctuations in the quality of the input water. In other words, the company expected relatively clean seawater, which was in no way contaminated by anything other than natural occurring events in the sea such as natural algae blooms and the general turbidity of the water,” she says.

However, soon after operation started it was discovered that there were more than natural contaminants in the water. 

“Added to the natural occurrences of variable turbidity and algae blooms, the plant also faced additional input water quality issues as a result of the sewage outlets into the sea nearby. This is well documented by Professors Petrik and Leslie Green from the University of Cape Town, who advised the City that their choice of sites for the plants was not viable. The City’s response was to ridicule the findings of the tests these two professors did of the water quality in False Bay as well as in the harbour.”

According to Dickson the company immediately alerted the City and asked for additional tests and assurances from the City that the water was within the tender specifications. 

“To remedy the situation and to meet with the contractual obligation to produce the 2 million litres of water per day, the company at its own costs installed a pre-filtration system. They also replaced their filters much more than what was expected during the design of the plant. These additional precautions, increased the cost of operating the plant considerably, costs which the City point blank refused to negotiate about,” says Dickson. 

“The company, however, continued up until six weeks ago to produce 181 million litres of water, of which the capital repayment amounts to over R20m still due to them,” she says. Ndlovu says the contract was valued at R53m of which QFS has only been paid R1.7m.

“Recently we received R2.5m from the City not linked to an invoice. Our invoices have been loaded on the accounts payable department of the City and have not been paid to date,” says Ndlovu. 

In a statement to the media last week, Mayco member for water and waste, Xanthea Limberg said the City is disappointed with this unilateral decision and is now considering the legal ramifications. 

According to Limberg, QFS has been paid to date for the actual amount of drinking water delivered to the City since May 2018. 

“It should be noted that in terms of the contract, the City does not own the plant and equipment. QFS were responsible for the cost of establishing the plant, which cost would have been recovered by QFS through the sale of water to the City,” she says.

“A requirement of the specification was that the plant would be able to cope with varying sea water quality conditions likely to be encountered at a selected site at the V&A Waterfront close to the harbour entrance,” she says.

“The contract was awarded to QFS to produce and deliver 2 million litres of potable water per day in accordance with the South African national drinking water quality standards, however, between May 2018 and January 2019, QFS was unable to fully comply with their obligations in terms of the contract,” says Limberg.

This, according to Limberg led to various contractual disputes with QFS, which culminated in the mediation process in January this year. 

“The City made every attempt to find a workable resolution with QFS and during the mediation process placed a number of proposals on the table. Each of these were rejected. The City has done everything possible to protect the service provider’s interest while staying within our mandate to meet the requirements of the Municipal Finance Management Act.”

Dickson is of the opinion that the City allowed the dispute to drag on for too long.

“The cryptic and long pauses between responses by the City to the serious predicament they placed the supplier of the Waterfront desalination plant in, reminds me of the way the City handled the De Lille saga,” she says.

“It caused unnecessary speculation and only serves as proof that the City is callous in its approach to anything they cannot control. In spite of being challenged by the company and having the mediation enforced by a court, the City concluded the mediation process with no outcome for either party. The City was represented by three lawyers and an advocate during the mediation proceedings. This raises the question of guilt on behalf of the City if they need such an entourage of defence if they had done nothing wrong.”

Dickson says the burning issue among the public is the fact that the City at one point alluded to the fact that the water produced by the plant had quality issues. 

“But at the same time the City took delivery of this water and it was sold to the public as fit to drink. The company assured me that the water was up to standard as they added pre-filtration and they changed the expensive filters much more often than was planned when the plant was set up,” Dickson says. 

Dickson is of the opinion that the latest media statement by the City hints that the company was paid an amount that represents full payment. 

“This seems not to be true as the company claims that the City needs to pay them in full for the 181 million litres of desalinated water it delivered to the City since May 2018. The City point blank refuse to accept that the specifications in the tender did not allow for the extreme poor quality of input seawater the desalination plant had to cope with.”

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