[miningmx.com] – HITACH Power Africa (HPA), a subsidiary of Tokyo-based Hitachi, said it would meet Eskom’s year-end deadline for completion of the first boiler of the utility’s R105bn Medupi power station.
Construction of the boilers has been delayed by below standard weldings culminating in the fierce criticism by Eskom CFO, Paul O’Flaherty, who said on July 8 that the performance of contractors “across the board [at Medupi] has been poor”, and were responsible for a six month overrun of the 4,750MW installation.
“We are now finalising the replacement of the welds identified as problematic,” said HPA CEO Johannes Musel. “We continue working with the clear target to achieve readiness of the steam generator for synchronisation by end of December 2013.’
All remaining work has been “properly planned” with work related to boiler pressure part welds taking place in parallel with the remaining work on the boiler unit, including remaining construction work and the commissioning of the plant, HPA said.
Musel said HPA took full responsibility for its part in the construction of Medupi, which was about 20% of the total project, but he added that “one needs to remain realistic in terms of the current socio-economic environment in South Africa”.
He was referring to labour protests and disputes which O’Flaherty also identified as a major cause of the project overrun at Medupi, and possibly at the 4,800MW Kusile power station which is Eskom’s next large capital project due for commissioning.
“The signing of a partnership agreement between Eskom, the contractors and organised labour is a step towards mitigating these risks nevertheless, site-specific agreements have yet to be finalised,’ Musel said.
Eskom said earlier this week that Medupi’s capital cost would increase to R105bn, some R10bn more than planned. It also said that there might be a 700MW supply gap as Medupi was not now anticipated to come on stream as planned.
The announcement today drew the criticism of Doug Kuni, chairman of the SA Independent Power Producers (SAIPP) who said that the real cost of Medupi’s overrun was actually R145bn rather than the R105bn estimated by Eskom.
“The cost to the economy of the Medupi delays is immense not only in building the station but in the compounded opportunity cost of lost and delayed growth, capacity and jobs due to constrained power supplies which is unlikely to be recouped,” Kuni said.
