Johannesburg - Eskom is poised to dump the controversial contract given to French multinational Alstom for managing the computer program “brain” that will manage the six boilers at the Medupi coal-fired power plant.
This threatens to further delay the project, the first stage of which is supposed to come on stream late next year.
Medupi, near Lephalale in Limpopo, is the biggest greenfield dry-cooled coal-fired power plant project in the southern hemisphere. It will generate 4 800 megawatts of electricity, helping to prevent possible blackouts and bolster thin safety margins between demand and supply.
Alstom is also contracted to provide six steam turbines with an output of 800MW each, while its software systems will manage the boilers supplied by Hitachi Power Africa.
While Eskom spokesman Andrew Etzinger would not confirm that Alstom was to be ditched – and possibly be replaced by Siemens – for the smaller contract, he did say last night: “Eskom engaged the market to ensure that it has a suitable contingency plan available to replace the current boiler protection system should Alstom not meet any of the relevant contractual milestones.”
Etzinger continued: “This has been done to mitigate the schedule risks associated with the current boiler protection system so as to ensure delivery of Medupi unit six in the second half of 2014.”
However, energy analyst Chris Yelland said he had been reliably informed that the computer software contract, which he described as “the brains of the system”, would be transferred to an alternative contractor “to complete the job”. He had been told that it was likely to be Siemens.
The boiler protection software controlled sensors “out in the field, monitoring temperatures and pressures… the software is like the brain processing the signals,” Yelland explained. It effectively ensures that the boilers do not explode.
EE Publishers reported yesterday that it had received “substantial information that Eskom is in the process of terminating the Alstom boiler protection contract”.
Spokespeople from Alstom were not available for comment last night.
Yelland said that a change in the supplier of software “at this late stage posed further serious risks to the delivery of first power from Medupi, currently scheduled for the second half of 2014”.
The boiler software has already delayed the Medupi project for a year. Eskom first announced in December last year that the Alstom boiler protection software had failed factory acceptance tests in France. In February, it called in Alstom’s performance bond for failing to meet its contractual performance guarantees.
Last month Eskom took action to punish contractors responsible for the delays at Medupi. Both ANC-linked Hitachi Power Africa and Alstom were served bills for cost overruns. It is understood that both had penalty clauses of between 10 percent and 15 percent of total value. This translates to nearly R15 billion for both contracts, taking the total cost to about R105bn.
Hitachi Power Africa was blamed for poor welding of the boilers and 9 000 defective welds needed to be fixed.
Paul O’Flaherty, a former chief financial officer at Eskom, reported before he left in March that Alstom’s boiler protection system, including software that provided information on what was happening inside the boiler, was up to nine months behind schedule.
Mayihlome Tshwete, the spokesman for Public Enterprises Minister Malusi Gigaba, said last night that the minister could not prescribe to the Eskom board how to deal with contracts. If contracts were to be reviewed, he said, it should be done in the context of ensuring that Medupi’s unit six went on line as soon as possible.
Whether or not to change contractors should be guided by that principle, Tshwete said.
DA energy spokesman Lance Greyling said if another software provider was appointed, there would inevitably be delays on the project. As Alstom was also providing the software for the Kusile project in Mpumalanga, that could also be delayed. “That is worrying,” he said.
Cancelling the Alstom contract would inevitably mean that there would be new timelines put in place, he said. - Business Report