Eskom’s R35bn Kusile plan intact

[] — SOUTH African electricity supplier Eskom said on Wednesday there was definitely “no threat’ to any of its planned infrastructure projects and that it was expecting the government’s approval for its final funding plans.

“We are waiting for the government’s confirmation of the funding plans we have presented to complete the Kusile project,’ Paul O’Flaherty, Eskom’s finance director told Miningmx’s sister website.

“We expect to get such approval this or next week. There is no threat to any of our current projects. That confirmation will show that Kusile is definitely going ahead as planned.’

O’Flaherty said the plans presented to government included a possible recapitalisation, government guarantees and additional debt. The plan was for the previously announced R45bn funding shortfall for the completion of the Kusile power station in Mpumalanga. “As things stand this week, all our projects are going ahead,’ said O’Flaherty.

He said any project cancellation would cast both the country and Eskom in bad light. “It’s not what Eskom wants. Not what the government wants. Definitely not what the country wants,’ said O’Flaherty.

An energy department official had early on Wednesday said that a cancellation of the coal-fired Kusile power station “is one of the scenarios’ that government would consider.

However, Eskom said in an update in July that construction at Kusile was “going well ahead of plan’ for the commissioning of the first generating unit by 2014. The station, one of three major infrastructure expansion projects, was about 17% complete.

O’Flaherty spoke to hours after Eskom CEO,Brian Dames , also denied any cancellation of Kusile. Dames said Eskom’s board, together with the government, would make a decision about how to fund the R45bn shortfall in the “next few weeks’.

Dames was reacting to an announcement by the energy department’s deputy director general Omphi Aphane, who said earlier that the cancellation of the Kusile project “is one of the scenarios” for South Africa’s new national electricity plan.

Dames, speaking from China where he is part of the business delegation accompanying President Jacob Zuma on a state visit, said the Eskom board and government would decide how to proceed with the funding of the project in the next few weeks.

“It is important for the security of supply that the construction of Kusile goes ahead as planned,” he said.

Kusile (in Witbank, Mpumalanga) is the second 4,800MW power station that Eskom is building to alleviate the shortage of power.

Its first generating unit of 600MW is planned to come on stream by mid-2014. Eskom said in July progress on Kusile was “going well ahead of plan” since the commencement of construction in April 2008.

The other projects are the 4,800MW Medupi power station in Limpopo and the Ingula pump storage project, whose first of four units will come on stream in January 2013. Ingula has a 1,352MW capacity.

Eskom said in April it had built about 22% of the Medupi project, and the first generating unit was still on track to be commissioned in the first quarter of 2012.