Funder says Eskom’s $8.7bn power plant won’t make money
An $8.7-billion power plant in South Africa won’t ever make a profit because of delays, design defects and increasing opposition to coal-fired electricity generation, one of its funders said.
Cost overruns at the 4 764 MW Medupi coal-fired plant, owned by Eskom Holdings, along with the even larger Kusile facility are seen as key reasons for the State utility’s R396-billion debt burden. The project will not meet anticipated returns over its life and is unlikely to stay open that long as pressure grows to reduce greenhouse gas emissions, said the African Development Bank (AfDB), which approved a €930-million loan for its construction in 2009.
“The Medupi project as installed will not show a positive return and will deliver internal rates of return below the weighted cost of capital for Eskom,” the AfDB said in a completion report posted on its website last month. “This project will not show a financial benefit over its lifetime.”
Medupi, together with Kusile, was touted as the solution to the intermittent power outages that have plagued South Africa since 2008. Instead it’s become a millstone. An explosion at one of its units last year has temporarily reduced its capacity. Now Eskom is being pushed to accelerate the closure of its coal-fired plants to help the country transition to green energy.
“Due to current perceptions of coal energy this plant is unlikely to reach its original projected 50-year life,” the AfDB said. “Choice of megaprojects with such long lives needs very careful consideration to avoid the challenges now faced by this project in terms of cost and time overruns as well as climate change related environmental concerns.”
Other funders of the plant include the World Bank. News24 reported on the AfDB’s report earlier.
Article Enquiry
Email Article
Save Article
Feedback
To advertise email advertising@creamermedia.co.za or click here
Press Office
Announcements
What's On
Subscribe to improve your user experience...
Option 1 (equivalent of R125 a month):
Receive a weekly copy of Creamer Media's Engineering News & Mining Weekly magazine
(print copy for those in South Africa and e-magazine for those outside of South Africa)
Receive daily email newsletters
Access to full search results
Access archive of magazine back copies
Access to Projects in Progress
Access to ONE Research Report of your choice in PDF format
Option 2 (equivalent of R375 a month):
All benefits from Option 1
PLUS
Access to Creamer Media's Research Channel Africa for ALL Research Reports, in PDF format, on various industrial and mining sectors
including Electricity; Water; Energy Transition; Hydrogen; Roads, Rail and Ports; Coal; Gold; Platinum; Battery Metals; etc.
Already a subscriber?
Forgotten your password?
Receive weekly copy of Creamer Media's Engineering News & Mining Weekly magazine (print copy for those in South Africa and e-magazine for those outside of South Africa)
➕
Recieve daily email newsletters
➕
Access to full search results
➕
Access archive of magazine back copies
➕
Access to Projects in Progress
➕
Access to ONE Research Report of your choice in PDF format
RESEARCH CHANNEL AFRICA
R4500 (equivalent of R375 a month)
SUBSCRIBEAll benefits from Option 1
➕
Access to Creamer Media's Research Channel Africa for ALL Research Reports on various industrial and mining sectors, in PDF format, including on:
Electricity
➕
Water
➕
Energy Transition
➕
Hydrogen
➕
Roads, Rail and Ports
➕
Coal
➕
Gold
➕
Platinum
➕
Battery Metals
➕
etc.
Receive all benefits from Option 1 or Option 2 delivered to numerous people at your company
➕
Multiple User names and Passwords for simultaneous log-ins
➕
Intranet integration access to all in your organisation















