DA: Medupi delay to cost taxpayers R10bn

Johannesburg - The delay in getting Eskom's Medupi power station operating comes at an expected 15% price increase, pushing the cost of the project from R91bn to R105bn, said the Democratic Alliance on Monday.

Eskom said labour unrest and under-performing contractors have made it unable to generate electricity from its new Medupi plant until the second half of 2014.

It marked a six months delay in the scheduled.

"Eskom has confirmed that the December 2013 target date is unlikely to be met," it said in a statement.

"A more realistic target for the first synchronisation of unit six to the grid is the second half of 2014."

Democratic Alliance MP Natasha Michael said the set back comes at a hefty price to the taxpayers.

"The latest delay forecasts a shortfall of power supply in 2014 of 700MW and comes at an expected 15% price increase, pushing the cost of the project from R91bn to R105bn, an additional R10bn to taxpayers," she said in a statement.

Michael also called on Public Enterprises Minister Malusi Gigaba to take action.

"The minister must now act on his word and make sure some heads roll and face the consequences of poor management at the project."

She said not having power would negatively affect economic growth and job creation.

Technical problems

Unit six was expected to be the first of Medupi's six units to deliver "first power".

Eskom said that critical technical challenges need to be resolved in order for at least one of Medupi's six 800MW units up and running by December.

"These technical challenges relate to the welding on the boilers, and the control and instrumentation systems for the units. In addition are the ongoing labour challenges."

The "critical" issues on the boiler related to inadequate post-weld heat treatment, and the replacement of welds which were made using unqualified procedures.

This was not the first delay because of welding problems. Previously, faults in factory welds had been discovered.

Eskom said on Monday that effective interventions had been put in place to address the problems, and the progress of repairs was being monitored.

Labour relations

On labour relations, the parastatal said processes had been developed to address grievances, and salary discrepancies were being addressed.

In January, Eskom temporarily closed the power station when contract workers went on strike. Construction was also interrupted in September when workers downed tools.

Workers belonging to the National Union of Metalworkers of SA had questioned the way their year-end bonuses were calculated, and complained that employees who lived in the area were paid less than workers who came in from Johannesburg.

Gigaba intervened in March and said the construction deadline would not change. He said strict penalties would be imposed on contractors should they fail to meet their obligations.

Medupi would add another 4800MW. It was expected to be completed by 2015. It was initially scheduled to make its first contribution to the grid in 2013 and Kusile in 2014.

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