Panic sets in as deadlines shift and winter nears
ESKOM is putting on a brave face — but there is panic behind the scenes over the Medupi project.
Senior officials from Alstrom and Hitachi have been summoned to Medupi to take responsibility for their operations there and Eskom’s financial director, Paul O’Flaherty, will be standing over them to ensure they do the job.
But even if Medupi’s Unit 6 comes online by the end of the year, the 800MW it produces will merely be a plaster on South Africa’s powersupply crisis. Things are so tight that Eskom chief executive Brian Dames said on Friday that any new power source would do.
The CEO is clearly frustrated by the inefficiency and ineptitude of the major contractors, most notably Hitachi and Alstrom.
“We were assured we wouldn’t be let down again,” he said.
He intimated on Friday that he had little option but to award the R20-billion boiler contract to the consortium of Hitachi Power Europe and its subsidiary, Hitachi Power Africa, because other contenders from China and Korea would have been unable to start work immediately.
In Hitachi’s defence, he said the contract had been assessed and approved by the World Bank, which lent South Africa $3-billion in 2010 to ensure power security in the country.
Hitachi’s involvement in Medupi has been controversial from the start. The R20-billion contract awarded to the company was the biggest in Eskom ’ s 90-year history. But Chancellor House, the ANC’s front company, owns 25% of Hitachi
The CEO is clearly frustrated by the inefficiency and ineptitude of the major contractors, notably Hitachi and Alstrom
Power Africa — which meant the ruling party was player and referee in the deal.
Hitachi claimed not to have known of Chancellor House’s connection to the ANC — and the ruling party said its interest was coincidental.
In 2011, construction of the boiler at Unit 6 was held up and it was clear that Medupi was going to be late. Hitachi spokeswoman Pamella Radebe said at the time that it was not all the fault of her company.
Soon afterwards, workers went on strike, torching buses and damaging vehicles, apparently because foreign and not South African boilermakers were working on the site.
This year, 9 000 welds on Hitachi’s Unit 6 have been found to be substandard and need to be hardness-tested, but the company expects that less than 10% of the welds will need to be repaired.
Radebe said the tests and repairs would not hold up other work being done on Unit 6. But even if no time is lost, the extra work will push up costs that taxpayers and power users will have to cover.
“Eskom has done exceptionally well, ” Dames said. “Every day the lights stay on.” But to make sure this happens, Eskom is paying an undisclosed amount to powerhungry companies to stop work so that about 1 000MW can be freed up. And O’Flaherty wants another 1 000MW to be made available as South Africa heads into winter.
Only 34 000MW of the 43 000MW of installed power is being used, but the balance is taken up in power outages and maintenance.
Spare capacity is hovering around 2% and, because only critical maintenance and repairs are being carried out, unplanned outages are increasing.
In two years’ time, if Medupi’s six units are all operational and the Kusile power station in Mpumalanga has come online, a total of 9 600MW will have been added to the grid.
Then the power-intensive companies may be able to go back to work, instead of being paid to do nothing, and domestic consumers will not be warned to cut 10% of their usage to ward off rolling blackouts.
But there is another major threat to South Africa’s power security even before Medupi comes online: a two-week-old wildcat strike at six of Exxaro’s coal mines.
Three of the mines are the biggest suppliers of coal to power stations. Dames said power to the grid was being scaled down at affected stations as coal delivery slowed.
One of the mines is Grootegeluk, the biggest open-cast mine in the world, which feeds the Matimba power station and will supply Medupi. The emergency coal stockpile at Matimba is reported to have declined to 15 days. At its peak, the station adds almost 4 000MW to the grid.
Eskom is under severe pressure from Public Works Minister Malusi Gigaba, who has made it clear he will not tolerate any further delays at Medupi.
Eskom simply had to do more, and do better, to manage the contractors and the project, or “strict penalties will be imposed”, he said recently. Unions and
A union shop steward said he believed there was an element of sabotage in the labour disputes at Medupi
employers needed to bear in mind the urgency of the project.
Gigaba is adamant that Unit 6 will be online at the end of the year and that all stops have been pulled out to make the deadline.
But those working at Medupi believe some of the delays are deliberate — the slower things go, the more money there is to be made, especially for the smaller contractors and subcontractors who will not be fined.
Elias Matutu, a shop steward for the National Union of Metalworkers, said he believed there was an element of sabotage in the labour disputes at Medupi.
Workers wanted to work, and to work overtime, but there was clearly no sense of urgency to get the job done if employees were continuously frustrated and provoked into striking.
Matutu said one of the biggest problems at Medupi was the lack of communication between the various layers of management in the construction companies, as well as their communication with the workers.
He said agreements made at executive consultative forums were often not passed on to the people meant to implement them.
For example, it was agreed that R2 000 would be paid to each worker, along with a loan amounting to 90 hours’ work. But the money did not materialise, which sparked further protests.