Name and Location
Medupi power station project, Limpopo, South Africa.

Client
Eskom.

Project Description
Medupi will be located on an 883 ha site in Lephalale, Limpopo.

It will be a dry-cooled coal-fired, baseload power-generating plant, comprising six 794 MW units, with a 4 764 MW installed capacity – the biggest of its kind with dry cooling in the world.

The planned operational life of the station is 50 years.

The power station will use high-tech supercritical boilers, which will operate at higher temperatures and pressures than the older boilers, thereby providing greater efficiency.

It is the first baseload coal-fired station to be built in South Africa in more than 20 years and its delivery on schedule is viewed as critical.

The project will form part of the utility's integrated strategic electricity plan.

Value
The cost of the project has increased from R91.2-billion to R105-billion.

Duration
The first unit, Unit 6, will be synchronised to the grid in 2014, instead of December 2013, as was previously announced.

Latest Developments

Eskom has confirmed that it will not meet the end-of-year deadline for the flow of first power from the Medupi power station.

Following an independent assessment and new delays to the control and instrumentation (C&I) contract, the second half of 2014 has now been slated as the new, "realistic" deadline for synchronising Medupi's first unit, Unit 6, to the grid.

The power station was meant to supply first power to the grid by December 2013, a deadline reaffirmed as non-negotiable earlier this year by Public Enterprises Minister Malusi Gigaba.

The cost of the project has also increased from R91.2-billion to R105-billion, excluding interest during construction (IDC). However, the IDC is not expected to deviate materially from the R30-billion estimated previously, despite the cost increase and the project delay.

A large portion of the cost increase relates to owner’s development costs, which have risen from R6-billion to R11-billion, as a result of Eskom allocating additional urgent resources to deal with delays at the strike-prone site.

However, coal-handling costs will also increase, as it has been decided that a new stockpile should be developed to enable Eskom to continue receiving coal from Exxaro’s Grootegeluk mine despite the delay.

Eskom CEO Brian Dames has indicated that a commercial strategy will be established to recover the additional costs from those contractors that fail to deliver. However, he has warned that such a recovery process will take time to conclude.

Department of Public Enterprises spokesperson Mayihlome Tshwete has described the new delay as “unfortunate”, but stresses that Eskom has kept Gigaba and the department appraised of the risks to the schedule throughout.

Gigaba will continue to place pressure on Eskom and its contractors to mimimise future delays and provide electricity certainty for the country. He will also support Eskom in its efforts to recoup the additional costs in line with the contractual remedies available to it, and use available leverage to insist on greater levels of accountability, particularly in instances where underperformance by individuals or companies can be proved.

The Minister has also tasked Eskom with providing mitigation strategies to ensure uninterruptable electricity, notwithstanding the delay. He has also received agreement from the Eskom board to split the role of the CFO, who has been overseeing the build programme, and create a new position of executive for group capital to improve performance.

The latest delay could result in a potential supply/demand gap of an estimated 700 MW in the first half of 2014, which Eskom hopes to close through a range of demand- and supply-side initiatives. However, no details have been disclosed.

Meanwhile, French energy solutions group Alstom has acknowledged that tests performed on the boiler protection system (BPS), which forms part of the C&I solution to be installed at the Medupi power station, has not been “fully satisfactory”.

The 4 764 MW coal-fired project has been afflicted by serious labour unrest, boiler-weld problems and the failure of factory tests for the C&I software, which is being supplied by Alstom.

However, in a statement released following Eskom’s announcement that the start of the first Medupi unit would be delayed, Alstom has said it remains confident of delivering its commitments for Medupi “in line with agreed timeframes”.

It has described the BPS as a “complex system” and the requested Medupi configuration as “demanding”.

It has also argued that the delays could not be attributed to a single contractor, noting that several other contractors were also facing technical problems at Medupi.

Besides the C&I contract, Alstom is supplying 12 turbine islands to the Medupi and Kusile projects.

Key Contracts and Suppliers
Parsons Brinckenhoff (contracts manager); Exxaro Resources (coal agreement); Roshcon (enabling civils); BKS Group (audit and design of concrete steel structures); Murray & Roberts, or M&R (structural steel fabrication and erection, mechanical installation works, boiler construction and civil works contract); Energy Fabrication (supply of 30 000 t of fabrication platework for the boiler ducting and coal bunkers); HPA and Hitachi Power Europe, or HPE (engineering, supply, manufacturing, construction and commissioning of utility steam generators, as well as related components, such as regenerative steam air heaters, coal mills and feeders, sootblowers, fans, de-ashers and high- and low-pressure pipework); Alstom (turbine-generator protection equipment); SPX Corporation (pulse-jet fabric filters and air preheaters, as well as the manufacture of pressure parts); GEA (design, manufacture, supply and erection of the air-cooled condensers); Hansen Transmissions South Africa (condenser gearboxes); Afrimat, in partnership with local suppliers Chobe Crushers (supply of aggregate); BroKrew Industrial (fabrication, corrosion protection and the delivery of ducting for six air-cooled condenser sections); Genrec Engineering (awarded several projects by M&R, which is contracted to HPA (connection design, as well as detail, fabricate and supply the structural steel for the boiler island, auxiliary bay structures, ash transverse conveyors, coal incline conveyors, and the primary and secondary coal conveyors); SSI (engineering services); Cosira (turbine hall); Kwikspace (modular accommodation units); Sarens (mobile crane hire); Voith Turbo (Vorecon drives); Concrete Finishing Equipment (dust filters and silo and environmental safety); Areva's transmission and distribution (T&D) division (switchgear cubicles); Mikropul (axial-flow fans and auxiliary equipment for the turbine halls' ventilation); General Electric, or GE (low-voltage switchgear system); Siemens (generator transformers); Clyde Bergemann Power Group, subcontracted by HPA (supplier of sootblowers for boilers); Clyde Bergemann Africa (fly-ash handling and conditioning systems); DSE Structural Engineers & Contractors, subcontracted by Genrec Engineering (air preheater structure); Steel Services Direct, or SSD (steel, pipes and wax plants); GB Bearings (supplier of HSR horizontal bearing assemblies and profile bore bearings); Sulzer Pumps South Africa, subcontracted by Actom (fabrication of 48 pumps for boiler feed, booster and condensate extraction duties); Steloy Castings, subcontracted by Sulzer Pumps South Africa (supply of chrome steel components for the pumps); ThyssenKrupp Materials Handling, or TKMH (coal stockyard equipment); a.b.e. Construction Chemicals (supply of waterproofing, flooring and sealant products, as well as other general construction products); LP Services consortium (engineering, procurement and construction contract for the low-pressure services); Lighting Structures (design, manufacture, supply and installation of Hi Masts); Basil Read (ash-dump infrastructure); ELB Engineering Services (terrace coal and ash); Actom (electrical power installation, chimney and silos) Aqua Engineering (water treatment);  Konecranes (heavy-duty cranes) and Wade Walker (electrical and instrumentation subcontract).

On Budget and on Time?
The project will not meet the end-of-year deadline for the flow of first power and will cost R105-billion, excluding IDC instead of R91.2-billion as initially announced.

Contact Details for Project Information
a.b.e. Construction Chemicals, Elrene Smuts, tel +27 11 306 9000.
Actom, Mark Dixon, tel +27 11 820 5111, fax +27 11 820 5100 or email mark.dixon@actom.co.za.
Afrimat investor and corporate relations, tel +27 11 325 5944 or fax +27 11 325 5942.
Areva T&D, Mark Dixon, tel +27 11 820 5037; or James Mulholland, tel +33 1 34 96 31 82 or email james.mulholland@areva.td.com.
BKS Group, tel +27 12 421 3500, fax +27 12 421 3501 or email group@bks.co.za.
BroKrew, tel +27 11 668 6300 or fax +27 11 955 1958.
Chobe Crushers, tel +27 14 763 5130.
Clyde Bergemann Africa, tel +2 7 11 704 0580, fax +27 11 704 0597 or email enquiry@cbz.co.za.
Clyde Bergemann Power Group, tel +49 281 815 101, fax +49 281 815 184 or email info@clydebergemannpowergroup.com.
Cosira group senior project manager Jerry Methi, tel +27 11 817 6600, cell +27 86 537 1730 or email jerrymethi@cosiragroup.com.
DSE Structural Engineers & Contractors, tel +27 11 871 4111, fax +27 11 871 4141 or email dse@grinaker-lta.co.za; or MD Kobus Marais, cell +27 82 904 4657 or email kmarais@grinaker-lta.co.za.
Energy Fabrication, tel +27 11 456 1000, fax +27 86 637 1756 or email info@energyfabrication.co.za.
Eskom Enterprise Medupi project senior communications adviser Mashudu Ramulifho, tel +27 14 762 2148, fax +27 86 607 6080, cell +27 82 901 7184 or email Mashudu.Ramulifho@eskom.co.za.
Eskom media desk, tel +27 800 3304/3309/3343/3378, fax +27 11 800 3805 or email mediadesk@eskom.co.za.
Eskom national call centre, tel 0860 037 566.
Exxaro Resources investor relations Adriaan de Beer, tel +27 12 307 4189 or email adriaan.debeer@exxaro.com.
GB Bearings, tel +27 11 974 1291 or fax +27 11 974 1468; or sales and marketing manager Alan Parkinson, email alan.parkinson@gbbearings.co.za.
GEA Aircooled Systems engineering and contract manager Albert Zapke, tel +27 11 861 1521 or email Albert.Zapke@geagroup.com.
GE corporate investor communications, Elizabeth Seibert, tel +1 203 373 2460 or email ir.contacts@corporate.ge.com; or corporate investor communications director JoAnna Morris, tel +1 203 373 2472 or email ir.contacts@corporate.ge.com.
Genrec Engineering, tel +27 11 876 2300, fax +27 11 827 1733 or email sales@genreceng.co.za.
Hansen Transmissions project manager Ludwig Maier, tel +27 11 571 9611, cell +27 82 213 2218 or email lmaier@hansentransmissions.com.
HPA, tel +27 11 260 4300, fax +27 11 656 3609 or email info@hitachi-power.co.za; or media liaison Pamella Radebe, tel +27 11 260 4300 or email p_radebe@hitachi-power.co.za.
HPE, tel +49 203 80 38 0 or fax +49 203 80 38 1809.
Kwikspace, tel +27 11 903 8993 or email barney@kwikspace.co.za.
IWC, tel +27 11 466 0699, fax +27 11 466 8180 or email mail@iwc.co.za.
Lesedi Nuclear Services marketing manager Shane Pereira, tel +27 21 525 1300, fax +27 21 525 1333 or email shane.pereira@lesedins.co.za.
Mikropul, tel +27 478 0456, fax +27 478 0371 or email sales@mikropul.co.za.
M&R, tel +27 11 723 2080; or group communications executive Ed Jardim, tel +27 11 456 6200, fax +27 11 455 1322, cell +27 83 357 6282 or email eduard.jardim@murrob.com.
Parsons Brinckenhoff, tel +27 11 787 4141, fax +27 11 886 0359 or email project@pbworld.com.
Roshcon, tel +27 11 629 8000 or fax +27 11 626 3460.
Sarens, tel +27 11 861 3800, fax +27 11 861 3899 or email info@sarenssa.co.za.
SSD, tel +27 11 828 0439 or fax +27 11 828 2810; or director Theo van Schie, email theo@steelservicesdirect.co.za.
SSI CEO Naren Bhojaram, tel +27 11 798 6000, fax +27 11 798 6005 or email corporate@ssi.co.za.
Steloy Castings, tel +27 13 933 3331, fax +27 13 933 3653 or email info@steloy.com.
Sulzer Pumps South Africa, tel +27 11 820 6252 or fax +27 11 820 6205; or Gavin Doran, email gavin.doran@sulzer.com.
TKMH, tel +27 11 236 1000 or fax +27 11 236 1235; or marketing manager Willie Agenbag, email Willie.agenbag@thyssenkrupp.com.
Voith Turbo operations manager Izak van der Walt, tel +27 11 418 4076, fax +27 11 418 4059 or email vanderwalt@voith.com.
Wetback Contracts, tel +27 11 392 8000, fax +27 11 392 5856 or email info@wetback.co.za.
Lighting Structures, Pieter Jooste, tel +27 87 310 1000, fax +27 86 699 6999 or email p.jooste@leblancgroup.com.
Konecranes, tel +27 11 864 2800.
Wade Walker, Tim Wakefield, tel +27 11 466 0377 or email tim@wadewalker.co.za.