It seems that the enormous costs of the two coal-fired power stations, Medupi in Limpopo and Kusile in Mpumalanga, have not been rocketing at all. Eskom spokeswoman Hilary Joffe was asked about the rocketing costs of the projects, but she said Eskom’s cost estimates for the two power plants “have not changed since September 2009”.
At that time Eskom estimated the cost of Medupi, excluding interest during construction, at R98.9 billion and of Kusile at R121bn, excluding Industrial Development Corporation funding.
“These were submitted at the time of our MYPD2 (multi-year price determination) application to the National Energy Regulator (Nersa),” said Joffe, a former journalist for a rival business publication.
Nersa had made its multi-year price determination in early 2010 based on these figures. “They have not changed, except that we have now moved transmission expenditure out of the cost of those projects so the cost estimate for Medupi is now R91.2bn and for Kusile R118.5bn.”
Provision for contingencies was built into those costs “and we remain comfortable with our estimates of the total cost”.
Cost estimates did increase significantly, she acknowledged, between 2006 and 2007, “before the projects went out to tender”. This happened at the end of 2009. “It should be remembered that Eskom was given the go-ahead by government to start building when it was already acknowledged that the country had left it too late”.
The projects were fast-tracked, based initially on “virtual designs”, said Joffe.
Once Eskom started the projects, the costs increased for three main reasons: scope changes, changes in market prices, and project delays, particularly at Kusile where uncertainty about funding caused a delay of almost a year until October 2010 “when Eskom put a funding plan in place for the build programme with government support”.
It all seems like good news, doesn’t it?
Verimark
An immediate decline in Verimark’s sales after recent price increases showed just how price sensitive consumers can be.
According to chief executive Michael van Straaten, due to the weaker rand, Verimark had to increase its selling price in order to maintain gross profit margins.
But the retailer forgot that Verimark’s range was largely discretionary items which were usually bought with consumers’ disposable income. Retail analysts have repeatedly said that consumers’ disposable income was stretched and that consumers were now more price conscious. Price and value were of the most sought after characteristics when shopping.
This will not in any way deter retailers from increasing their prices, it is the nature of the game. All retailers, including Verimark, were banking on Christmas sales, so the stores are full to capacity and tills will definitely jingle.
Verimark could have increased prices earlier in the year but the retailer was, however, advised that the strength of the rand might pick up in the year, but it did not. Other issues facing Verimark were centralised distribution centres, which most retailers were dealing with this year, especially Pick n Pay.
Currently, the company operates from four warehouses, which was multiplying costs as each warehouse needed its own security system, manager, telephone lines and all other items needed for operational use.
Verimark was supposed to have moved into its new facility in October, but would now have to wait until January next year.
Van Straaten was positive that all the work that had been done around distribution centres would pay off in the next financial year. “In this way we would have consolidated all our costs and we would start seeing nice results soon.”
He concluded by saying that consumers had now adjusted to new prices and sales were slowly picking up.
Privacy
Minister of Communications Dina Pule was the guest of honour at Vodacom’s Thought Leaders’ Seminar on the Future of Privacy and the World in 2020 at the University of Pretoria yesterday.
Pule talked about how privacy, as society understood it, had evolved substantially over the past few years.
“The advent of social media and the advancements in mobile technology has redefined what we know to be private and public. When one shares one’s innermost thoughts with 5 000 followers on Twitter, it’s difficult to draw a line between the public and private spaces. Which is why we are gathered here today,” Pule said.
This year the minister’s privacy was invaded when a weekend newspaper exposed how all was not well with the expenditure of sponsorships for the Information and Communications Indaba, which a firm appointed by Pule had organised.
The newspaper went a step further and obtained records and information that designer shoes the minister had worn to the ICT extravaganza were bought from sponsorship funds which the minister’s close male friend had dipped into.
Someone else close to the minister, her deputy Stella Ndabeni-Abrahams, was exposed yet again by the media for her unsavoury comments on the social media platform Facebook. Earlier this year she lashed out at Winnie Madikizela-Mandela suggesting she was a hypocrite for her comments on President Jacob Zuma’s polygamous lifestyle.
Ndabeni-Abrahams’ recent blunder was to criticise Mamphela Ramphele’s representation of the Biko family in spite of her having been a “mistress” to a married Steve Biko. Ramphele has been silent on the matter. Ndabeni-Abrahams, holding such as high position, should have known better than to openly comment, even if Facebook is her private business.
As a public servant, why was she not reprimanded in the same manner as Hawks spokesman McIntosh Polela for his Vaseline joke on Twitter?
Edited by Peter DeIonno. With contributions from Donwald Pressly, Nompumelelo Magwaza and Asha Speckman.