De Ruyter: Fixing of Medupi defects to be done by year end - at R300 million per unit

[Spreadsheet Ranger]

The fixing of defects at Eskom's Medupi Power Station, which has been hobbled by delays and design flaws, is expected to be concluded by year end, Chief Executive Andre de Ruyter said on Tuesday.

 

Eskom reported that technical and structural defects had been identified on the flagship 4 800 MW facility, which was was touted as the answer to country's power supply constraints. Some units of the firm's other mega power station, Kusile, have also been defective.

 

De Ruyter said Eskom had identified the design defects at Medupi and Kusile and was currently implementing the necessary modifications, and that work per unit takes about R300 million.

"By the end of this calendar year, Medupi should be done and we start the same process at Kusile," De Ruyter said in his address at the annual Directors Event.

 

Eskom had previously blamed the deficiencies on boilers supplied by Mitsubishi Hitachi Power Systems Africa, but that company blamed the faults on local contractors.

 

The construction of the two coal-fired power stations, which started over 10 years ago, has been marred by breakdowns at some of its units, contributing to intermittent load shedding.

 

De Ruyter, who took over as CEO at the beginning of the year, is driving the latest turnaround strategy of the state-owned power utility, which is focused on streamlining operations, infrastructure maintenance and stabilising the debt-hit balance sheet.

 

He stressed that operational stability was the foundation for turning around the business, which has in recent years been increasingly reliant on government for support. Eskom's debt is currently sitting at R488 billion, with the bulk guaranteed by National Treasury. The company hopes to cut debt to R200 billion or below.

 

The construction of Medupi, which was previously expected to cost R145 billion, has also contributed to Eskom's debt worries. Kusile's bill was put at R161 billion earlier this year; however, the fixing of defects is set to push the expenditure even higher.

 

While Eskom is dealing with defects on its new build, the maintenance of the company's aging coal fleet is also going ahead, in a bid to address the threat of load shedding and alleviate supply constraints which have hobbled economic growth and hit households.

 

In his address, De Ruyter further stated that renewable energy will be at the centre of Eskom's additional generation plans when the state-owned power producer eventually retires some of its aging plant in the coming years.

 

The right determination granted by Mineral Resources and Energy minister Gwede Mantashe enables Eskom to procure 11.8GW of additional electricity in future; and solar, wind and gas would be explored. 

 

One of the main benefits of renewables is the shorter timeline from construction to bringing power online, compared to coal and nuclear plants, which take much longer to build - a luxury the country can ill afford, given current capacity challenges and increasing barriers to the funding of new coal projects.

 

Source: News24