Eskom’s new power plants on schedule

LEPHALALE, South Africa – Two 4 800 MW power plants South African utility Eskom is constructing are on track, and it expects to seek approval from the board for a third plant in December, Eskom said on Monday.

Eskom, which provides 95 per cent of South Africa’s power, has been rationing electricity since early last year, when a near collapse of the grid forced mines and smelters to shut for days, costing the biggest economy in Africa billions of dollars.The utility has since embarked on a N$385 billion (US$48 billion) new power expansion plan to supply fast rising demand.’We plan to take the proposal for the third power station to our board in December. The approval usually takes three months,’ Kobus Steyn, senior general manager for capital expansion told Reuters during a visit to the Medupi construction site.If approved, the plant could be ready as soon as 2016.The Medupi plant is Eskom’s first new project in more than two decades. Its first unit is expected to be commissioned by April 2012, with the last of the six units due in 2015.’The publicised date of April 2012 for the first Medupi unit is valid…we are on track,’ Steyn said.Once completed, Medupi will be the fourth largest coal plant in the world and the biggest dry-cooled power station globally.The first unit of Eskom’s second 4 800 MW coal-fired power plant, Kusile, was also on schedule for commissioning in June 2013 or even as early as January that year, Steyn said, with the full plant operational by 2017.ESCALATING COSTSCosts for both power plants have risen drastically on the back of higher cost of borrowing in the face of the financial crisis, with each plant estimated to cost over N$120 billion, up from previous estimates of around
N$80 billion.Eskom has said it will rely on an increase in electricity tariffs, government funding and borrowing to raise the funds for expansion and also consider public-partnerships for its projects as it struggles to fill its funding gap.’Public-private partnerships aren’t something we are not looking at … we have been approached,’ said Brian Dames, chief officer for generation at the utility.Eskom has also set a target to cut costs by up to 20 per cent across its projects to further bridge the funding shortfall.Dames said it expects the French government to provide up to one billion euro (US$1,42 billion) in export credit facilities for its turbine supplier Alstom, with a decision expected within weeks.Dames said the pace of new projects would depend on demand growth which the utility said had dropped by around eight per cent in the past year on the back of the economic slowdown.He said Eskom now expects demand for electricity to grow by 1-2 per cent per year going forward once the economy recovers, down from previous projections of around four percent annually.- Nampa-Reuters