Aug 21, 2012
Medupi, Kusile overruns should be probed, NPC commissioner assertsBack
Eskom|China|South Africa|Taiwan|MW Taichung Plant|University Of Cape Town Graduate School|Energy-policy Academic|Anton Eberhard
© Reuse this
The projects would be the third- and fourth-largest coal plants in the world, with Kusile set to add 4 800 MW and Medupi 4 764 MW worth of capacity between late 2013 and 2018 – only the 7 100 MW Taichung plant, in Taiwan, and the 5 000 MW Waigaoqiao, in China, are larger.
Eskom expects Medupi to cost R91.2-billion to complete and Kusile R118.5-billion (both figures exclude interest during construction).
However, NPC commissioner Professor Anton Eberhard, of the University of Cape Town Graduate School of Business, argued that cost visibility remained poor, while it was also unclear how far the current budgets exceeded initial estimates.
That said, he argued that the enquiry should not be premised on reversing the implementation of the projects. Rather, the objective should be to build greater accountability within State-owned companies on how capital expenditure was conceptualised, managed and funded.
Addressing a conference on economic regulation, hosted by the National Energy Regulator of South Africa, Eberhard said there was currently insufficient regulatory oversight and control over large capital expenditure programmes, notwithstanding the fact that these lay at the heart of the country’s recent power price increases.
He argued that an enquiry could yield planning and investment lessons and stimulate strategies that encouraged greater diversity and innovation and possibly incremental rather than mega projects.
Eberhard’s statements came as Eskom FD Paul O’Flaherty was updating lawmakers on the status of Eskom’s build programme, as well as some of the challenges that the programme had confronted.
The presentation showed that the utility still needed to spend R323-billion between April 1, 2012, and March 31, 2018, to complete Medupi, Kusile and Ingula, as well as to add transmission and distribution infrastructure.
O’Flaherty said that a combination of factors relating to the civil engineering and boiler aspects of the Medupi project had resulted in a 20-month delay and that the first unit was expected to be introduced in December of 2013.
The first Kusile unit would be commissioned in December 2014 and had been delayed owing to funding difficulties, which were now in hand.
O’Flaherty said the reasons for the cost increases were understood and that lessons had been learnt, which would help Eskom in future projects.
“Good progress has been made, but many serious risks, including contractor performance, will need to be carefully managed,” he told lawmakers.
Edited by: Creamer Media Reporter© Reuse this Comment Guidelines
Other Electricity News
The use of biofuels, as a renewable-energy source, presents the potential for numerous environmental, energy security and efficiency benefits to the South African economy, says law firm ENSafrica senior associate environmental law division senior associate Andrew...
Recent Research Reports
Steel 2014: A review of South Africa's steel sector (PDF Report)
Creamer Media’s Steel 2014 report provides an overview of the global steel industry and particularly of South Africa’s steel sector over the past year, including details of production and consumption, as well as the country's primary carbon steel and stainless...
Projects in Progress 2014 - First Edition (PDF Report)
This publication contains insight into progress at the delayed Medupi and Kusile coal-fired projects, in Mpumalanga and Limpopo respectively, as well as at the Ingula pumped-storage scheme, which is under construction on the border between the Free State and...
Automotive 2014: A review of South Africa's automotive sector (PDF Report)
The report provides insight into the business environment, the key participants in the sector, local construction demand, geographic diversification, competition within the sector, corporate activity, skills, safety, environmental considerations and the challenges...
Construction 2014: A review of South Africa's construction sector (PDF Report)
Construction data released during 2013 hints at a halt to the decline in the industry during the last few years, with some commentators averring that the industry could be poised for recovery. However, others have urged caution, noting that the prospects for a...
Electricity 2014: A Review of South Africa's Electricity Sector (PDF Report)
This report provides an overview of the state of electricity generation and transmission in South Africa and examines electricity planning, investment in generation capacity, electricity tariffs, the role of independent power producers and demand-focused initiatives,...
Defence 2013: A review of South Africa's defence industry (PDF Report)
Creamer Media’s 2013 Defence Report examines South Africa’s defence industry, with particular focus on the key players in the sector, the innovations that have come out of the defence sector, local and export demand, South Africa’s controversial...
This Week's Magazine
The Electronic Systems Laboratory (ESL) of the Department of Electrical and Electronic Engineering at Stellenbosch University is strongly reaffirming its position as one of South Africa’s leading centres for satellite technology and expertise. It is currently...
The world’s lowest-cost diesel-electric locomotive is not made in China, but in Pretoria, at RRL Grindrod Locomotives’ newly upgraded 30 000 m2 plant. The company’s locomotive pricing is “more competitive than any other original-equipment manufacturer (OEM)...
The South African Defence Review 2012, released to the public at the end of last month (despite the year given in its title) recommends the creation of the post of Chief Defence Scientist. This official would be responsible for the management of defence technology...
AltX-listed engineering technology company Ansys has been awarded an R188-million contract by Transnet to supply integrated dashboard display systems to the freight rail utility’s locomotives. Black-owned and controlled Ansys developed the bespoke integrated system...
South Africa’s sole nuclear power station Koeberg, which is located in the Western Cape, breached a major operations milestone on April 4, which marked the thirtieth anniversary of Unit 1 having been connected to the grid. Eskom, which operates the two-unit plant,...