Johannesburg - Public Enterprises Minister Malusi Gigaba says the delay in Eskom's Medupi power plant delivering first power at the end of this year is 'disturbing', leading his department to enlist the services of independent consultants to assist the utility going forward.
“Government has placed at its core of delivering the infrastructure development programme in order to create the much needed jobs, develop skills and industrialise our economy.
“The importance of delivering on capacity expansion projects to increase overall Eskom generating capacity cannot be understated. I'm extremely disturbed by these further delays being experienced," Gigaba said on Wednesday.
He was speaking at the release of the utility's financial results.
The Department of Public Enterprises (DPE) has commissioned independent consultants, who will help with looking at the project management capabilities of the utility and also ascertain the risk of the build programme and cost escalation, among others.
“The scope [of the consultants’ work] is broader than Medupi," said Gigaba, adding that it encompassed the entire build programme of the entity.
The results of the study by the consultants will assist the entity and the shareholder (DPE) in crafting a way forward.
The results of the study are expected in two months' time. The minister said the department would be advised by its findings.
The state-owned entity on Monday announced that the first unit of the coal-fired Medupi station was unlikely to deliver first power on the envisioned December 2013 delivery date, but was only likely to do so in the second half of 2014. This was due to technical issues as well as labour matters.
Medupi is one of the two coal-fired stations that are being built under Eskom’s build programme. The other is Kusile, located in Mpumalanga.
DPE Director General Tseliso Matona and senior Eskom officials will meet with Alstom -- one of the major contractors at Medupi -- in France to discuss the events of the Limpopo plant. The other major contractor is Hitachi.
The minister expressed support for Eskom's penalties on non-performing contractors.
"This doesn't preclude other remedial actions. It is important to be forward thinking. The study will inform corrective action. We should not make rash decisions that could impact the build programme," said Gigaba.
The revised date to deliver first power “puts pressure” on an already constrained system, Gigaba said.
The build programme began in 2005, with completion due in 2018.
Eskom revenue improves
Eskom reported group revenue of R128.9 billion in the financial year ended 31 March 2013, up from R114.8 billion in 2012. This was an increase of 12.2%.
The financial report reviews the company's overall performance for the financial year from 1 April 2012 to 31 March this year. The results reflect the impact of the 16% tariff increase granted by the National Energy Regulator of SA (Nersa) for 2012/13 and declining demand for electricity due to lower economic growth and industrial unrest.
The utility said that revenue growth has been offset by escalating operating expenditures, mainly due to an increase in primary energy costs.
The utility's net profit decreased from R13.2 billion as of 31 March 2012, to R5.2 billion by 31 March 2013.
Profit made will be reinvested back in the business, Chief Executive Officer of the entity Brian Dames said, noting that the tariff decision by Nersa in Eskom's Multi-year price determination (MYPD3) application would require new thinking from the entity.
The utility had been able to keep the lights on, despite it being a tough year. Eskom has conducted maintenance work for the first time at its plants over the winter period.
The minister expressed satisfaction at the entity's results.
"I am pleased with the results. The surplus of R5.2 billion will be reinvested into the business. Eskom has kept the lights on," he said. - SAnews.gov.za
