Further delays in first synchronisation of Unit 6 at Medupi announced by Eskom

December 5th, 2014, Published in Articles: Energize

 

At its interim financial results presentation for the period 1 April to 30 September 2014, which was held on 25 November 2014, Eskom announced further delays in first synchronisation of Unit 6 (the first generation unit to be synchronised to the grid) at Medupi power station.

Chris-YellandThe project team at Eskom and the minister of Public Enterprises, Lynne Brown, had earlier committed to first synchronisation of Unit 6 at Medupi on 24 December 2014, and Eskom has been conducting a well-publicised count-down to this date. Following update reports from the Medupi site project team, headed by Medupi project manager Roman Crookes, Eskom formally extended the expected date of first synchronisation of Unit 6 to mid January 2015.

Being just one of the milestones along the way to handover of the first unit at Medupi to Eskom Generation for commercial use some six months later, the exact date of this synchronisation is largely symbolic, and Eskom was at pains to point out the significant progress being made in the commissioning of this unit. However the delay announced today and will prove to be damaging to Eskom’s reputation and credibility.

The announcement follows repeated earlier broken progress commitments to its shareholder representative and the public, and comes at a time when Eskom is conducting mandatory country-wide rotating load-shedding resulting directly and indirectly from the delays in the completion of Medupi and Kusile.

Construction programme

Unit 6 is the first of six 800 MW units at Medupi, and is currently scheduled to deliver stable commercial base-load power into the grid by mid 2015. The second unit at Medupi is currently scheduled for handover by mid/end 2016, with the remaining four units following at six monthly intervals thereafter, taking final completion of the 4800 MW Medupi power station to mid/end 2018 at the earliest. The six units at Eskom’s Kusile power station are each scheduled one year later than the corresponding units at Medupi, taking final completion of Kusile to mid/end 2019 at the earliest.

Time overruns

The 1998 Government White Paper on Energy Policy indicated that decisions for new generation capacity were needed by 1999 to avoid power shortages by 2008. In the event, the decision to proceed with the new-build programme was only given to Eskom in 2004, and power shortages in the form of rolling blackouts in South Africa occurred in late 2007 and early 2008. Thus delays in the implementation by government of its stated policy prevented the commencement of the generation capacity build programme by five years.

Subsequent to this, in December 2007, the Eskom board finally approved the construction of the six units at Medupi, for hand-over of the last unit for commercial use by 31 October 2013. The construction of six units at Kusile received board approval in March 2008, for final completion and hand-over for commercial use by 31 October 2014. These execution delays by Eskom have resulted in a further five year delay at both Medupi and Kusile.

Cost overruns

The cost initially approved by the Eskom board for the construction of Medupi was R69,1-billion (excluding flue gas desulphurisation and interest during construction), and R80,6-billion for Kusile (including flue gas desulphurisation and excluding interest during construction).

The final costs to completion for both Medupi and Kusile are still uncertain, but are currently estimated at R154,2-billion and R172,2-billion respectively (including flue gas desulphursation, interest during construction and the settling of outstanding contractor claims).

Further cost increases resulting from interventions and time overruns at Medupi and Kusile are expected to be announced in the next few weeks.

 

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