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04 Apr 2019 10:37
Eskom's Medupi power station. (Madelene Cronje/M&G)
Construction on the Medupi and Kusile power stations will go ahead as the cost of halting the projects will not benefit the economy, the Chairperson of the Eskom board Jabu Mabuza has said.
The power plants are expected to cost R18-billion each.
Mabuza was speaking at a media briefing on the state of South Africa’s power supply on Wednesday along with other Eskom executives and Public Enterprises Minister Pravin Gordhan.
The building of the coal-fired power stations, which started in 2007 and 2008, has been hit by cost overruns, poor engineering designs and allegations of corruption.
Mabuza said questions had been raised on whether it would be feasible to stop construction on the multi-billion rand coal plants now or to continue the process until completion.
“We have done the exercise and have concluded that the costs of not continuing is not going to be met by the benefit of continuing,” said Mabuza.
He said the questions about the viability of stopping the construction at the two mega power plants had been raised by some board members who wanted to know the cost implications if the projects were to be stopped.
“Given that they are at a point where they are almost complete… it would cost around R18-billion each to complete,” he said.
Mabuza said that should they not complete the projects, it was estimated that an additional cost of more or less R8-billion would be incurred in contractual, legal costs and penalties.
“So if you stop this, then you are going to have to build something else.”
He said this could take between 60 and 66 months.
Once hailed as the answer to the country’s electricity supply challenges, the costs for the plants have already escalated to over R300-billion, as revealed this year by the Department of Public Enterprises before a parliamentary Portfolio Committee.
Once completed, Medupi power station was expected to consist of six units, with an installed capacity of 4 764MW. In October 2018, Eskom announced that five of its six units had been synchronised to the national power grid
Unit 1 of Kusile went live in August 2017, according to the power utility.
A Sunday Times report this year revealed that the Special Investigating Unit (SIU) was investigating alleged theft of R139-billion related to the construction of Medupi and Kusile power stations.
According to the newspaper, the SIU is looking at 11 contractors as part of its investigation into the building of the two facilities. — Fin24
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