Separating Medupi fact from myth – and helping some critics get off Dames’s back

(Photo: Lisa Hnatowicz/Foto24)
(Photo: Lisa Hnatowicz/Foto24)

By Alec Hogg

After lengthy delays in the commissioning of Medupi – and well publicised cost overruns – South Africans have been fretting that the new super power station will be paying for it through high electricity tariffs for decades. So I asked Eskom’s “Mr Reliable” Andrew Etzinger to help us dispense with the idle chatter and providing a hard figure for the final cost of Medupi.

The good news is that even after all those escalations, electricity produced by the new super power station is still comfortably under the global average. Eskom financial whizz Deon Joubert says Medupi’s all-in production cost comes in at $3 000/kW, putting it in the bottom quartile of modern plants worldwide (ie 75% produce at a higher cost).

The international range for these plants is between $2 500 and $6 800/kW. As for the cost escalations, Joubert says the biggest single jump (130%) was in 2005 when the project design more than doubled from 2 100 MW to 4 800 MW. Nice to hear the truth is more palatable than the myth. Hopefully this will get at least some critics off the back of former CEO Brian Dames, a highly competent engineer and thoroughly decent man.

* For more in-depth business news, visit biznews.com or simply sign up for the daily newsletter.

ZAR/USD
17.42
(+0.14)
ZAR/GBP
22.84
(-0.32)
ZAR/EUR
20.64
(-0.25)
ZAR/AUD
12.49
(+0.08)
ZAR/JPY
0.16
(+0.23)
Gold
1934.20
(+0.72)
Silver
26.52
(+3.54)
Platinum
947.00
(+1.88)
Brent Crude
45.32
(+2.09)
Palladium
2203.50
(+3.28)
All Share
57286.19
(-0.23)
Top 40
52988.77
(-0.26)
Financial 15
10206.16
(+0.65)
Industrial 25
75906.81
(-0.40)
Resource 10
58792.28
(-0.34)
All JSE data delayed by at least 15 minutes morningstar logo
Company Snapshot
Voting Booth
Do you think it was a good idea for the government to approach the IMF for a $4.3 billion loan to fight Covid-19?
Please select an option Oops! Something went wrong, please try again later.
Results
Yes. We need the money.
11% - 986 votes
It depends on how the funds are used.
74% - 6547 votes
No. We should have gotten the loan elsewhere.
15% - 1367 votes
Vote