Pioneers of the R130bn botch-up
JUST who do we think we are? Some sort of world technological leader, some sort of trailblazer that can set new standards for other nations to follow? We seem to forget that we are a minnow, an economic midget accounting for about 0.5% of the world’s economy.
These thoughts were prompted by a comment from a spokesman for the French company Alstom, which is contracted to deliver R13-billion in steam turbines as well as control and instrumentation software for Eskom’s chaotic Medupi power station project.
Alstom’s Kobie Hyman told Business Day that the technology required by Eskom “is demanding. No other coal plant has ever been built on this scale.”
Ah, so, we must be first; we must be the pioneers. We must set a standard in coal-fired power production that the rest of the world can emulate.
And to achieve this we bring in French and Japanese operators, ignoring the fact that two of our partners in the famous Brics grouping, China and India, are, in terms of experience, world leaders in the construction of coal-fired power stations.
China alone consumes half of the planet’s entire coal output. The World Resources Institute said that India was planning 455 new plants and China another 363.
“The pace changes, but at the peak [the Chinese] were building the equivalent of a 200MW coal-power station every day,” said Carlos Fernandez Alvarez, senior analyst at the International Energy Agency. Medupi is a 4 800MW unit — the Chinese were building one Medupi equivalent every 24 days.
It is interesting to learn from a Peabody Energy study that, over the next four years, China is expected to add 240GW to its capacity. Medupi is a 4.8GW project.
Chinese and Indian powerplant builders finance themselves in the international markets to fund their domestic projects, and might well do the same for work in Africa. But no, we must use French and Japanese operators, countries with which we presumably do not share quite the same fraternal and warm relationships believed to exist in the Brics setup. But then the ANC might not have been granted a free carry of 25% of the lead builder, as it so kindly was by Hitachi.
As in the corrupt and unnecessary arms deal, the original culprit in the Eskom farrago of rolling blackouts, soaring prices and sweetheart deals with mining companies such as Billiton was the supposedly sharp-minded Thabo Mbeki, who refused to permit Eskom to expand, despite every expert view to the contrary.
As Mbeki illustrated, arrogance is an ANC hallmark. It led it to allow Eskom to plan for large, bespoke power stations with 800MW modules, instead of following the international best practice of using smaller, standard 300MW modules that were available “off the shelf”, as Viola Manuel of the Cape Business Chamber remarked.
Eskom’s former finance chief, Mick Davis, now a billionaire mining king, told the Wits Business School in 2010 that this option would have been quicker and a great deal cheaper.
Now this R130-billion ballsup is at least four years late and, according to Infrastructure News, R77-billion over budget. It adds: “Eskom will lose more than four years of revenue from a 4 764MW station, which amounts to about 86 billion kilowatt-hours of energy. At a conservative figure of 50c/kWh, this is a loss of R43-billion in revenue that could have been used to offset electricity price increases.”
And there is no telling the cost in lost output and inconvenience; some say R1-trillion. But don’t hold your breath waiting for “heads will roll” Malusi Gigaba to address this. He is the minister of what are laughingly known as stateowned enterprises, which are enterprising only in terms of waste, corruption, incompetence and devouring taxpayers’ hard-earned money.