Fresh delays at Medupi and Kusile amid eye-watering costs
Power utility Eskom says that it has revised the completion times for the Medupi and Kusile power stations, which are now expected to be in full operation by 2023 and 2026, respectively.
Presenting an update on oversight recommendations to the Standing Committee on Public Accounts (Scopa) on Wednesday (19 October), Eskom said that R33 billion is still needed to complete the power stations, with a further R40 billion budgeted for additional run-on projects at Medupi.
The Medupi project began in 2007 and has faced numerous delays while running over budget. The first of the project’s units attained commercial operation status in August 2015. The plant was initially expected to be fully completed in 2012.
Work at Kusile, meanwhile, began in 2008, with the first synchronisation taking place in 2017, three years after the original completion date.
In terms of budget, Medupi and Kusile had an initial budget of R79 billion and R81 billion, respectively. In 2020, the Eskom board approved budget revisions to complete the power stations, giving R145 billion for Medupi and R161.4 billion for Kusile’s build.
In the same year, Eskom committed to completing Medupi and Kusile power stations by the revised dates of 2020 and 2023, respectively. The completion date for Kusile had subsequently been pushed back to 2025.
While Medupi reached full commercial operation in August 2021 – a year after the promised deadline – the power utility has had to implement several revisions and technical solutions to address major defects at the plant. These defects were also found at Kusile, which has four units in operation.
The latest update from Eskom is that the power stations will be fully completed in 2023 and 2026, for Medupi and Kusile, respectively.
According to Eskom, R126 billion and R147 billion of the revised 2020 budget have been spent, leaving R19 billion and R14 billion remaining. To date, no additional costs have been incurred, it said.
However, Eskom noted that Medupi’s budget does not include the cost of installing the Flue Gas Desulphurisation (FGD) plant. The Medupi FGD plant is expected to cost between R35 billion and R40 billion, and will be commissioned by 2027/28. The FGD has already been installed at Kusile and is included in its budget.
The final completion of the builds has also been hampered by technical problems and defects.
Unit 4 at Medupi, which suffered a catastrophic hydrogen explosion in 2021, remains offline and is only expected to return to service in September 2024.
On 17 September 2022, Eskom said it experienced a fire in the gas air heater of Unit 5 of Kusile during a commissioning exercise. As of 18 October, the root cause is unknown.
The utility noted that a similar fire in Unit 2 happened a few years ago, which resulted in a 12-month delay. Because of this, the group said that it would likely only get Unit 5 online by December 2024. Unit 6, however, remains on track for completion by May 2024.
Defects
The reason for the delays at the plants is due to technical issues and major plant defects, Eskom said. These are system or equipment defects that result in or have the potential to, significantly reduce the Energy Availability Factor of multiple units, and where the available contractual defect resolution remedies have not been effective.
The five major plant defects at Medupi and Kusile include the following:
- Medupi and Kusile Pulse Jet Fabric Filter Plant (PJFF) poor performance due to inadequate pulsing system and flue gas flow entry;
- Medupi and Kusile Gas Air Heater (GAH) mechanical performance, erosion, and operational performance in terms of ash carryover and outlet temperature stratification;
- Medupi and Kusile Furnace Exit Gas Temperature resulting in excessive Reheater Spray Water flow;
- Medupi and Kusile Milling plant defects;
- Medupi and Kusile Air and Flue Gas ducting erosion.
Eskom said it is making steady progress in developing and implementing effective technical solutions to the major plant defects at the plants, with the EAF at Medupi – excluding the impact unit 4 that is currently offline for repairs – improving from 64% to 85%, since the effective correction of the defects.
The completion of the first phase of the effective correction of the major plant defects at Medupi and Kusile is forecast for 2023, it said.
Additional plant defect corrections, undertaken by Eskom in-house with or without third-party involvement, is forecast for completion after 2027, depending on the extent of technical solutions and unit outage availability as per the Eskom outage plan.
The cost of executing the major defects identified in the plants is managed within the project budgets, it said, and it is holding liable parties and contractors responsible for the defects to account.
“(They) are fully responsible for the related major plant defect costs,” the group said.
However, it noted that the outcome of the current corruption investigations at Kusile, some commercial challenges, and the past Covid-19 pandemic are negatively impacting the business case for Kusile, hence the delays.
The Special Investigating Unit (SIU) is investigating instances of corruption or conflicts of interest related to the Medupi and Kusile builds, with 29 contracts valued at R135 billion under review.
The bulk of the contracts is related to Kusile (24), valued at R88 billion, where various cases are being prepared, and litigation against employees had commenced, the group said.
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