Hitachi Power Africa aims to use manufacturing facilities in South Africa, which it has established at a cost of R1.6 billion to deliver on its Medupi and Kusile power station contracts, for Eskom’s third new coal-fired power station and for other industry work, including in neighbouring states.
Mark Marais, the fleet director for the Medupi and Kusile power stations at primary contractor Hitachi Power Africa, said the cabinet had approved Eskom’s third new coal-fired power station and Hitachi would aim to use the facilities it had established in the country for future fabrication.
Trade and Industry Minister Rob Davies said last month that the cabinet had given the green light for the so-called Coal 3 plant to be built. He said the tight electricity demand-and-supply balance was a constraint to growth “that requires immediate attention” but no timeline for the project was available as Eskom was still looking at ways to finance it.
Chancellor House, the ANC’s investment arm, has a shareholding in Hitachi Power Africa.
Defective welding by a sub-contractor on boilers supplied by Hitachi for Medupi and problems with turbines supplied by Alstom have contributed to the completion of the project being delayed and moved to the second half of next year.
Eight months of construction time has been lost on Medupi, mostly in the past 12 months due to labour unrest and disruptions.
Marais said at a recent seminar hosted by the Science and Technology Department and Hitachi on the global lessons in implementing large scale infrastructure projects that the firm had agreed to a solution with Eskom and was applying it.
He stressed the welding problems would not affect the final completion date.
However, Sapa reported that the Supreme Court of Appeal had ruled on September 12 that Eskom was entitled to access the performance bonds held by a bank for Hitachi Power Africa related to the Medupi contract after the South Gauteng High Court refused to allow Eskom to demand payment of certain guarantees.
Marais said there were claims “in many directions, not only from Eskom” and Hitachi had claims on the table against third parties. He said a condition of the tender was a minimum of 57 percent local content. During the pre-tender phase Hitachi had conducted an investigation of local market capability and capacity to identify potential strategic partners.
This investigation showed South Africa no longer had the capability and capacity for manufacturing boilers and Hitachi had invested R1.3bn in establishing a boiler and high pressure piping and pressure parts manufacturing business.
Marais said Hitachi had to upgrade existing structural steel facilities to enable it to manufacture the boiler mainframe support structure and design, manufacture and construct large ducting facilities on site that were too large to transport from fabrication facilities.
He defended Eskom’s decision to construct coal-fired power stations, stressing it was not irresponsible because the environmental impact had been a consideration and improvements had been made to reduce emissions.
The efficiency of the ash removal system in the two new power stations stood at 99.9 percent. Compared with the average of existing stations, nitrogen oxide emissions would be reduced by 62 percent, sulphur dioxide emissions by 90 percent and carbon dioxide emissions by 7 percent.
Marais said big infrastructure projects were doomed without an international and local material supply chain and comprehensive information management system. He added that correspondence between the two firms exceeded 40 000 documents; Hitachi was dealing with in excess of 2 million parts for Medupi that had to be tracked during the process.