Local has not been lekker in Lephalale

Traffic in the small town of Lephalale begins at 5am. The 12 kilometres trip to Eskom’s Medupi power station takes two hours before work officially starts at 7am. About 11 000 workers make their way to the site as, bumper to bumper, vehicles inch up the road.

The mammoth site towers over the Limpopo landscape.
Cranes and scaffolding lean against the colossal structures where workers persist in the Waterberg heat.

Medupi will be the world’s fourth-largest dry-cooled coal power station. With Kusile and Ingula, it is expected to stem an imminent power crisis in South Africa with an installed capacity of 4 764MW.

In its annual report released in March Eskom said the R98.9-billion project was progressing well. But last week it announced that the ­construction of Medupi was at risk because of delays in the boiler contract. The power utility warned that the deadline of the project had been moved to 2013.

Medupi is magnificent—its sheer size is astounding. There is no doubt Eskom is building its power reserves and capacity, but the community believes the project has brought more harm than good to Lephalale.

Medupi’s big sister, Matimba, was built in the area in 1981. During construction the town boomed as businesses were set up all over. But once Matimba was completed, only a few hundred workers were retained to operate the power station. Companies went under and Ellisras, as Lephalale was then known, soon became a ghost town. Locals are worried that history will repeat itself.

Eskom’s contracts uphold a substantial investment in local content and the World Bank provided a $3.75-billion loan to help build Medupi that came with conditions of local content and skills.

Eskom estimated that the effect on Lephalale’s gross domestic product would be 95%, whereas 58% of the project spend would be local. Its annual report stated that the parastatal was fulfilling its objectives: the total contracted local content was R33-billion, or 64.27% of the total contracted amount of R51-billion.

According to the parastatal, infrastructure upgrades such as sewerage, housing and roads would be an added benefit for the surrounding community and a large share of the Medupi spend would benefit local construction companies.

What’s the deal?
But local businesses say this is not the case.

Wayne Derksen, vice-chairman of the Lephalale Business Forum, claimed that in reality less than 10% of the money was spent in the town.

“We don’t want the town to fall flat when the project is finished. We are just saying ‘give us some work’,” he told the Mail & Guardian.

The forum was formed in January and represents 3 000 businesses that feel they are not benefiting as much as they should.

More than 1 000 houses have been built in the past two years, but contractors and building materials were all sourced from elsewhere.

Derksen said the excuse given was that the prices from local businesses were just too high, which he said was untrue.

Countless meetings with the ­municipality and government have resulted in some work beginning to trickle in. “Yes, we are being heard, but we are not being heard enough,” said Derksen.

Local industries or businesses that are thriving are the ones selling accommodation, food and alcohol, as well as petrol.

Justice Ledwaba, chairman of the forum, is concerned about the gains, or lack thereof, for rural communities. The leadership in the area is predominantly traditional but Ledwaba said he was rarely invited to discuss the issues concerning Medupi. He claimed subcontractors were running the show, with little involvement from Eskom, and they preferred to deal with people they knew—meaning locals had received little work.

“Eskom needs to monitor and evaluate and ensure the empowerment of the local people,” he said.

Ledwaba warned of a ticking time bomb in Lephalale. “We are absorbing pressure from the people, but the day we decide to unleash it there will be chaos.”

Labour issue
Another issue, potentially more explosive, is labour. Outside Medupi’s gates four workers waited for a taxi as the sun began to set. Warthogs and vervet monkeys played in the distance as vehicles streamed out of the site.

“I get R19 or R20 an hour,” one young labourer said. “It’s not enough for the scale of what is happening here.” The workers said wages varied from R16 to R32 an hour, depending on expertise and the position. They do not complain for fear of being fired. “I could lose my job tomorrow and they could replace me with this guy,” said one, pointing at the worker next to him.

The relationship between the National Union of Mineworkers and Eskom began in 1987, but Job Matsepe, the union’s energy sector co-ordinator, said it had “collapsed this year because of the unilateral implementation of wage agreements”.

Eskom offered a 7% wage increase, whereas the union was demanding 13%. The Labour Court in Johannesburg ruled against the union’s application for an interdict against the parastatal.

Matsepe said the exploitation of workers at Medupi continued to be a problem. “Some workers have been there for two or three years and their wages remain very low.”

Local workers had been promised that they would benefit from the Medupi project, but Matsepe said this did not appear to be happening.

“It’s the people outside of Medupi, some as far as Iraq and Japan, who are benefiting — The people of Lephalale must be developed, but that has fallen on deaf ears.”

He made it clear that “contractors are in control, Eskom has no control. We handed a memorandum over to Eskom about our concerns at Medupi, but most of those have not changed.”

Dan Masango, a union shop steward, was recently dismissed from Medupi and will appeal against the decision in November. He believes another strike is looming if management does not pay attention to the workers’ grievances.

“Things were not fine from the onset,” he said. “There were discrepancies in our pay since the very beginning. Even now time sheets indicating overtime are often ‘lost’ when a pay query is lodged.”

Masango said sometimes the workers had to continue their labour in the heat of the day without any water. Electricity was also regularly cut off at the hostels. Women who had been placed at the hostels were continually harassed and many opted to live in town at their own expense. Racism, Masango said, was rife.

“I have been very vocal,” Masango said. “I have been representing people and taking management on regarding issues.” For this reason, he claimed, management had conspired to get rid of him. He attended a conference in Johannesburg with permission from management, but on his return he was accused of clocking in fraudulently. He said he was also tried in absentia at the time.

Masango claimed he was not the only worker to be disposed of in such a manner.

One shop steward who complained of rotten food was dismissed, as was another who queried why some workers were placed at the training centre and others were not.

Jack Maeko, chairperson of the ANC Lephalale subregion, said Medupi had been a “great disappointment”. He agreed there was a problem as far as the empowerment of local people was concerned. “There are more than 10 000 people on site and almost 95% are not local,” he said.

Two hundred employees were being trained to stay on once Medupi is in operation and only three of them were local, Maeko said, adding that the ANC in the area was planning a march in November to voice its concerns over Medupi’s failures.

Eskom said it would be unable to respond to the claims by the M&G deadline.

Sourcing more water
The Medupi power station project, which has already hit delays, could be at ­further “risk” if Eskom fails in its bid to extract more water from the Mokolo Dam than it is allowed.

The dam was built in the 1980s to supply industry in Lephalale and 16.5-million cubic metres a year can be released for irrigation, provided the dam level does not fall below 50%. Eskom has applied for an annual allowance to extract an additional 11.4-million cubic metres of water from the dam.

Agri-Limpopo president Francois van den Berg said Medupi and Matimba would be the only power stations in South Africa with only one water source. “Eskom is at very high risk,” he said.

The department of water affairs reportedly worked on an estimated allowance of 145-million cubic metres of water as a total volume of the Mokolo Dam to determine its yield, which is the annual amount of water that can be drawn from the dam on a long-term basis without it running dry. Figures on water in catchment areas such as Vaalwater and Alma are an important part of the calculation. But Van den Berg said these numbers were outdated “and even then the supply will be stretched to the absolute limit”. Over extraction from the dam will affect farmers the most.

The department said the planned supply from the dam was in line with its standard procedures for a high level of annual assurance of 99.5% for the Eskom power stations. But it noted that there was always a risk of supply failure over the long lifetime of power stations. It has advised Eskom that it will be prudent to supply backup from the Crocodile River system. “Without a transfer scheme from the Crocodile River, further new developments in the Lephalale area will also not be possible.”

Van den Berg said the size of this backup portion of the pipeline would be decided only “after engineering and cost optimisation has been done based on a revised assessment of water requirements”.

Eskom’s annual report stated that the Mokolo and Crocodile water augmentation project would provide enough capacity for Medupi’s water needs, but excluded water required for the planned flue gas desulphurisation process that requires a great deal of water to control emissions.

Eskom said there was adequate water from the surplus of Matimba power station’s water allocation.

Mired in sand
Disputed sand-mining activity in the Mokolo River that supplies water to Medupi has pitted various parties against one another.

The Mokolo is a unique river in that water is stored in the sand, which acts like a sponge. Agri-Limpopo president Francois van den Berg claimed that sand-mining activities to feed the Medupi project had increased pressure on the area’s water supply and was affecting farming operations.

Susan Goosen, a member of the Mokolo River Taxpayers’ Forum, said the construction project was using an enormous amount of sand from the river and, as a result, farmers were struggling to irrigate their crops.

Open-pit mining company Afrimat buys the sand from Labonte 5, headed by Leon Fourie, and sells it to Medupi Joint Venture.

The department of mineral resources said the preliminary report obtained from an investigation more than a year ago indicated that the issues raised had been found to be “not necessarily justifiable”.

Afrimat chief executive Andries van Heerden denied the accusations. “We believe that the mining is legal and above board because we did detailed audits. Eskom, Murray & Roberts and the department also did audits and local farmers applied for urgent court interdicts against them, which was denied with cost.”

But Van den Berg said the application had been denied only as a matter of urgency. “The merit of the application was never argued.”

The department of water affairs has also declared the activities legal—Labonte was given general authorisation, allowing it to undertake its activities. The department said it did “frequent and unannounced visits and inspections” to ensure adherence to the set conditions.

Van den Berg said the mining might no longer be unlawful but had been at some point, because Labonte 5 submitted an application in accordance with section 24G of the National Environmental Management Amendment Act—an admission of guilt for unauthorised activities. Fourie refused to comment.

Update: The following response to questions from the Mail & Guardian was received from Eskom spokesperson Hilary Joffe after Friday’s edition went to print.

Is Medupi on Schedule?
Eskom has expressed concerns relating to Medupi’s Unit 6 generating first power at the end of 2012. A detailed review of the Medupi project schedule is underway and an update will be provided on November 22 2011 during the release of the Eskom Interim Financial Results.

How much water is needed and where will it come from?
Medupi Power Station will require 4-million cubic metres of water per year for all 6 units without Flue Gas Desulphurisation (FGD). This will increase to between 10 and 14 million cubic meters per year with FGD. FGD is targeted for installation on Medupi after 2018.

Water is drawn from the Mokolo Dam, which currently has an excess annual capacity of eight million cubic metres per year. The Mokolo Dam Augmentation scheme, which is anticipated to be completed by 2013, as well as the Crocodile West Catchment pipeline which will be phased at a later stage will provide sufficient water for all future requirements.

Is Eskom confident it will be enough water to run the station and supply the existing users regardless of rainfall or drought?
Yes. Detailed analysis shows that there will be continued surplus capacity available.

Is there a back up plan should there not be enough water?
Yes. Evaluations of available ground water and other options are being investigated.

Why was the pipeline from the Crocodile River not built?
Currently there is surplus capacity of water. The Crocodile West Catchment Scheme is a planned long-term project to supply water post-2015 to allow for future growth in the region.

How many workers are currently on site, what will it increased to and once construction is complete how many people are expected to remain to run operations?

The peak site labour complement on 30th September amounted to 13 714 people. It is anticipated that the number could increase during the next few months to approximately 14 000 to 15 000, after which numbers will gradually decline over the remaining life of the project as and when construction works come to an end. Ongoing operations will be run by Generation Division, with 600 to 800 personnel required.

Of the number of workers currently on site, how many are performing unskilled labour?
Of the total of 13 714, the unskilled workers numbered 4452 (32.5%). Of these, over 99% were from Lephalale, and the rest from elsewhere in Limpopo Province. The remaining staff are semi-skilled, skilled, supervisors and managers.

Local business feels it is not receiving enough work in order to sustain the local economy once the project is completed. Workers also claim they are not trained or up-skilled but simply replaced when they cannot perform more complex tasks.

All Medupi contracts have definitive ASGISA requirements embedded therein. These requirements focus on skills transfer, localisation, BWO, BEE, SME investments. Currently 64% of the monetary value of the contracts let on Medupi are required to be expended within South Africa, and a total of 1827 people are required to be provided with skills training of a level ranging from skilled artisan through technician and up to engineer.

Focusing on the local-to-Lephalale environment, 4 446 workers have been employed, the majority of which are first-time employees who had no previous skill sets. As of now, all possess various skills in the mechanical/civil disciplines.

Eskom and the Contractors have invested circa R2.7-billion in Lephalale since 2007. Eskom and its contractors are focussed on utilising as much of the local industry as possible, and to develop new businesses to support the construction programme as well as the ongoing operation and maintenance phases of the Power Station after completion.

Lisa Steyn

Lisa Steyn

Lisa Steyn is a business reporter at the Mail & Guardian. She holds a master's degree in journalism and media studies from Wits University. Her areas of interest range from energy and mining to financial services and telecommunication. When she is not poring over annual reports, Lisa can usually be found pottering about the kitchen. Read more from Lisa Steyn

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