Aug 21, 2012
Medupi, Kusile overruns should be probed, NPC commissioner assertsBack
Construction|Engineering|Africa|CoAL|Eskom|PROJECT|Projects|Africa|China|South Africa|Taiwan|MW Taichung Plant|University Of Cape Town Graduate School|Energy|Energy-policy Academic|Anton Eberhard|Infrastructure|Power
© 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 (150 word limit)
Other Infrastructure News
Metal roofing industry body Southern African Metal Cladding and Roofing Association (Samcra), a division of the Southern African Institute of Steel Construction, completed the draft of the new standard for cladding, aimed at assisting engineers and specifiers with...
Recent Research Reports
Defence 2014: A review of South Africa's defence industry (PDF Report)
Creamer Media’s Defence 2014 report examines South Africa’s defence industry, with particular focus on the key participants in the sector, the innovations that have come out of the sector, local and export demand, South Africa’s controversial multibillion-rand...
Road and Rail 2014: A review of South Africa's road and rail infrastructure (PDF report)
Creamer Media’s Road and Rail 2014 report examines South Africa’s road and rail transport system, with particular focus on the size and state of the country’s road and rail network, the funding and maintenance of these respective networks, and the push to move road...
Real Economy Year Book 2014 (PDF Report)
This edition drills down into the performance and outlook for a variety of sectors, including automotive, construction, electricity, transport, steel, water, coal, gold, iron-ore and platinum.
Real Economy Insight: Automotive 2014 (PDF Report)
This four-page brief covers key developments in the automotive industry over the past 12 months, including an overview of South Africa’s automotive market, trade figures, production and the policies influencing the sector.
Real Economy Insight: Construction 2014 (PDF Report)
This five-page brief covers key developments in the construction industry over the past 12 months. It provides an overview of the sector and includes details of employment in the sector, infrastructure and municipal spending, as well as insight into companies’...
Real Economy Insight: Electricity 2014 (PDF Report)
This five-page brief covers key developments in the electricity industry over the past 12 months, including details of State-owned power utility Eskom’s generation activities, funding and tariffs, independent power producers and prospects for the sector.
This Week's Magazine
JSE-listed real estate investment trust (REIT) Rebosis Property Fund achieved a distribution growth of 8.1% to 99.45c per linked unit in the financial year ended August 31, despite volatile market conditions.
A low-cost, inflatable incubator won this year’s international James Dyson design award, which aims to encourage and inspire the next generation of design engineers.
The World Bank released its ‘Doing Business 2015: Going Beyond Efficiency’ report last month and ranked South Africa 43 out of 189 global economies for its ease of doing business, with Singapore topping the rankings.
Air Products South Africa officially launched its R300-million Eastern Cape air- separation unit (ASU), at its new manufacturing facility in the Coega Industrial Development Zone (IDZ), earlier this month. It is the second facility that Air Products launched in South...
BMW South Africa (SA) has signed a power purchasing agreement with energy company Bio2Watt. The offtake partnership will bring renewable energy to the carmaker’s Rosslyn plant, north of Pretoria.