Eskom says Medupi and Kusile will have great local benefits

Paul O’Flaherty, Financial Director of Eskom, told the parliamentary committee on economic development, that the building of South Africa’s new Medupi and Kusile power stations ranked among the top five power generation projects in the world in terms of energy capacity.

He said that Eskom’s “build programme” would contribute considerably to skills development and facilitate manufacturing capability in South Africa.   Competition for skills was fierce, both internationally and locally and the reality was, O’Flaherty said, that Eskom currently needed to spend R450bn for six years until 2017, as part of the government  Integrated Resource Plan, which was a considerable responsibility.

The funding plan to be serviced was R300 billion to 2017, as at 31 December 2011.

Medupi and Kusile were massive in their scale of construction, he said.  Parts and cement weighing the same as 14 super-tankers would be transported over land and steel, enough to build five of the world’s tallest buildings, would be used – all to produce a generation capacity of 10GW. During  the construction of Medupi, Kusile and a third plant being built called Ingula, about one half of the programme would involve the use of local content thereby directly benefiting the SA economy.

O’Flaherty said it was probable that just Medupi would touch the lives of 160 000 people in Limpopo province alone and would be of great support to local and national infrastructure.    Each project, he said, would in its own way immeasurably impact local towns through local spending and investment as each contract proceeded.

The project summary of Medupi power station, for example, was that it was a six-unit coal-fired power station with a planned capacity of 4 764MW, the projected cost being R98,9bn, O’Flaherty said.  Construction had commenced in March 2007, with the first unit planned to supply power to the grid between May 2013 and September 2013, and subsequent units at six to nine-month intervals thereafter.

Medupi had been delayed for various reasons, which O’Flaherty enlarged upon being mostly the boiler foundation re-design problems involving foundation work, consequent re-worked steels structurings and issues with regard to matters with the boiler contractors themselves.

Kusile, situated close to the existing Kendal power station near the town of Witbank in Mpumalanga province, is also a six-unit coal-fired power station with a planned capacity of 4 800MW and the projected project cost to completion is R121bn, all of which is having a great impact on nearby Delmas, O’Flaherty said.  The first unit planned is to be commissioned in December 2014, with subsequent Units 2 and 3 at 12-month intervals and units 4, 5 & 6 at eight-month intervals thereafter.

Ingula power station is a four-unit pump storage power station, he said, with a planned capacity of 4 800MW. The projected cost to completion was R21,9bn, with an estimated 7% impact on the GDP of nearby Ladysmith. Construction had commenced in mid-2006, and the first unit was planned to be commissioned in January 2014.

In answer to MP’s questions on the future of Medupi and Kusile power stations and how this would affect generating reserves, O’Flaherty said that providing demand grew at between the projected and expected 2 to 3 per cent, then Eskom would have more than a 20 per cent reserve margin by the time it completed the second power station, Kusile, both having a life span of about 40 – 50 years as was the case with most power stations.

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