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Jun 24, 2011

Eskom working hard to offset time lost due to violent protests

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Eskom senior GM of project execution Kobus Steyn discusses contractual challenges in the construction of the Bedford Dam.
Mpumalanga|Overland Park|Alstom|Cosira|Eskom|Hitachi|KCW|Murray & Roberts And Japanese|Roshcon|The Ex-Im Bank|US Bank Loan|South Africa|United States|USD|Building Medupi|Construction|Electricity|Steel|Hilary Joffe|Kobus Steyn|R5|Kansas
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State-owned power utility Eskom aimed to stress its zero tolerance of violent protests when it shut down operations at its Medupi and Kusile power plant construction projects, in May, spokesperson Hilary Joffe tells Engineering News.

“We have made it clear what our expectations are and that we will not tolerate violent behaviour. “This is partly why we refrained from restarting work at the sites for so long. We were not willing to allow contractors back on site if they could not clearly demonstrate that the issue was resolved,” she says.

In early May, more than 2 000 of the about 3 000 employees working for the Kusile Civil Works (KCW) joint venture protested in sympathy with workers who were in a wage dispute with Eskom subsidiary Roshcon. Prefabricated offices, vehicles and a mobile crane were damaged during the protest.

At Medupi, 500 employees of construction group Murray & Roberts and Japanese equipment specialist Hitachi also protested against Eskom allegedly hiring foreign welders. The protest resulted in two buses being torched and four other vehicles being damaged.

Following the violent protests, the power utility halted operations at both projects. Restricted access was implemented at the sites, with access reopened only to contractors that provided a satisfactory restart plan.

Site restriction at Medupi was lifted on May 16, after which the site became progressively operational with over 8 000 workers reporting for duty at the start of June.

Eskom senior GM of project execution Kobus Steyn says, although construction has resumed at Medupi, a police presence is being maintained on site until the situation is fully normalised.

“We have consulted with organised labour on the remobilisation process and criminal charges of arson and public violence were laid against some employees. “Four suspects were appre- hended, while one suspect handed himself over to the police,” he says.

Murray & Roberts and Hitachi took disciplinary action by compiling an agreement that serves as a final written warning for about 700 workers, including the 500 that took part in the protest.

“The agreement prevents workers from engaging in illegal strikes and it is written in such a way that it constitutes a final warning,“ Steyn notes.

Further, the Kusile site is partially operational with most contractors, except Roshcon and KCW, back on site.

Steyn says both Roshcon and KCW are continuing with actions to bring their employees back on site. Criminal charges of arson, possession of stolen goods and malicious damage to property were laid and arrests were made within days of the protests.

“Eskom and contractors will use the valuable lessons learnt from these events to prevent and better deal with future incidents.”

He adds that Eskom plays a governance and assurance role to ensure that all contractors and their employees adhere to the provisions of the Project Labour Agreement (PLA), the Labour Relations Act, the Basic Conditions of Service Act and recognition agreements between employers and employees.

Further, the utility is involved in overseeing and supervising dispute resolution in accordance with the dispute resolution process entrenched in the PLA. The disputes are first facilitated and then referred to the Centre for Effective Dispute Resolution (CEDR).

Disputes emanating from incidents at Medupi have been facilitated by Eskom and referred to the CEDR in accordance with the PLA.

Disciplinary processes at Kusile are still to be concluded.

“Roshcon and KCW are busy conducting independent hearings. Pending the outcome, employees must accept whatever disciplinary action is appropriate,” Steyn notes.

He emphasises that the utility makes every effort to ensure that a good relationship between its contractors and their employees is maintained.

“Eskom can only try to avoid such incidents by keeping abreast of workers’ issues and try to attend to these as quickly as possible.

“We are working hard to make up for lost time and plans are in place to mitigate the risk. Medupi is still on track for the first unit to be commissioned at the end of 2012, while Kusile’s first unit will go live at the end of 2014,” he says.

Project Progress

At the end of February, Medupi was 38.6% complete and Kusile 21%.

Engineering News reported in April that the threat of a power-generation supply deficit in 2012, as well as the need for flexibility to undertake maintenance on Eskom’s current power plants, were significant drivers behind the completion of the first two units at Medupi.

At the time, Steyn said that the pressure parts and structural work on the boiler of the first unit, Unit 6, as well as mechanical work on the auxiliary plant that supports the operating units, had to be completed this year.

The completion of the boiler will be realised in phases. The first significant milestone of the boiler’s completion is the performance of a pressure test, which is scheduled for October.

When Unit 6 comes on load, it will still be under the operation of the contractors for a six-month optimisation period, which involves optimising the machine’s combustion, temperature and efficiency performance for commercial operation.

The unit will be handed over as official capacity by the end of 2012, while all the units at Medupi are expected to be fully operational by the last quarter of 2015 to assist in providing Eskom with a 15% reserve margin.

Most of the civil works and the foundations on Unit 6 had been completed by the end of February, while 40% of its boiler’s mechanical work and 10% of the work on its turbine generator have been completed.

Civil works and foundations have also been completed at Unit 5, while about 80% of the civil works has been completed at Unit 4. In terms of the balance of plant, the civil works and supporting infrastructure, such as buildings, have been completed, while mechanical works are still in progress. Electrical and control instrumentation works are to follow.

Eskom has awarded all the contracts for Medupi at a cost of R56-billion.

In April, the utility stated that the project had a significantly short lead time from its first phase.

Eskom used the national electricity- demand growth scenario, which, in 2004, was 2.7%, to identify solutions that would counter the dropping reserve margin in South Africa’s generating capacity.

To achieve this aim, the utility decided to return to service its Mpumalanga-based Camden, Komati and Grootvlei power stations, which have a combined capacity of 3 800 MW. It also planned the construction of three new coal-fired power stations, which include Medupi and Kusile. At the time, Medupi also only comprised the construction of three units.

However, in 2006, government announced a 6% gross domestic product (GDP) growth scenario and instructed Eskom to adopt a 4% electricity demand growth scenario to support the GDP growth. This resulted in the decision to construct six units at Medupi instead of three, and add Kusile to the mix.

As a result, the utility did not have sufficient time to properly perform the upfront engineering work needed to ensure that the geological conditions of the site were 100% understood before construction started, the utility stated.

By the time the decision had been made to start building Medupi, only 48 core holes had been drilled on the site, with the international standard being 400.

Once construction started, the rock foundations were found to be significantly different from what was expected, resulting in the redesign of Medupi’s foundations. As a result, Medupi was delayed by one year.

Eskom further reported that the lessons learnt during the construction of Medupi would assist the utility in keeping Kusile, which is expected to reach full capacity by the end of 2018, on schedule.

Most of the terracing work on site is complete; however, the founding conditions at Kusile posed a greater challenge than those of Medupi, Steyn reported in April.

“In some instances, the rock bed is between 6 m and 17 m below the surface of the power station. “As a result, piling is required to ensure that the power station’s foundation is sound.

This involves the construction of 2 500 piles, which can each hold 50 t/m2 of pressure. This is a significant investment that was not originally envisaged when the project was started in 2008. The engineers have finalised the design of the foundation and piling,” said Steyn.

One-half of the civil works pertaining to the balance of plant is complete, with the civil works at Unit 1 being complete. This enables mechanical work on the unit’s boiler and turbine generator to start this month.

Kusile will be the first coal-fired power station in South Africa to be commissioned with wet flue gas desulphurisation (WFGD) units, which are worth about R4-billion collectively.

International power technology group Alstom was awarded a €160-million contract to build South Africa’s first WFGD system at the power station.

The contract is being executed in consortium with South African structural steel fabrication, mechanical and piping construction company Cosira.

The WFGD will result in the power station having cleaner outlet emissions, in terms of sulphur oxide, than any other power station in South Africa.

US Bank Loan
Eskom reported in May that it had secured finance for its new build programme with the approval by the US Export-Import Bank (Ex-Im Bank) board of an $805.6-million loan that translates into about R5.7-billion.
The Ex-Im Bank financing will assist Eskom in buying engineering and construction management services for its Kusile power station project from specialised project management and engineering firm Black & Veatch International, which is based in Overland Park, Kansas.

Black & Veatch will retain highly skilled senior engineers and support staff in the US to work on the Kusile project over the next five years.

The utility states that the Ex-Im Bank loan, details of which still have to be negotiated, will add to the R31-billion in export credit agency-backed finance it has already raised. Export credit agency finance is one of the sources Eskom is using as part of its R300-billion funding plan for the new build programme.

More than three-quarters of that funding has now been
secured.

“We are pleased with the decision by the Ex-Im Bank board to approve financing that will help build Eskom’s Kusile power station. “This is a statement of confidence by the US agency in Eskom and in South Africa, and it is an acknowledgement of the criticality of clean coal in Eskom’s fleet. “The funding will support the building of the capacity we need in order to keep the lights on and improve the quality of life for all South Africans,” said Eskom finance director Paul O’Flaherty.

Significant Contracts
Power and automation group ABB is undertaking a $43-million contract to supply automation and control equipment to the Kusile project.

It will supply the power plant with medium-voltage switchgear, as well as protection and supervisory control and data acquisition equipment.

It will also supply an electrical balance of plant solution for Eskom’s Ingula pumped-storage scheme in a $23-million contract that was awarded in September last year.

• With additional reporting by Tracy Hancock

.

Edited by: Chanel de Bruyn
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