Eskom allocates R4.5bn to struggling Medupi and Kusile power stations
Lethabo - Eskom board chairperson Jabu Mabuza on Wednesday, said that the state-owned utility has set aside R4.5 billion to address the power generation challenges at the Medupi and Kusile power stations.
The costs of Medupi and Kusile plants have already escalated more than double to over R290 billion and they have taken at least an additional five years extra to build.
Both the power plants were supposed to add almost 9 600 megawatts to the grid, but they are at their tail end of the build.
Addressing the media at Eskom's Lethabo Power Plant in the Free State, Mabuza said that there were socio-economic prices to pay if Eskom were to abandon its new build in Medupi and Kusile as its current power continues to deteriorate.
"We did say that we are reviewing the cost and benefit analysis of continuing or otherwise on Medupi and Kusile. It was important that we apply our minds on that. We have done the exercise and we have concluded that the cost of not continuing is not going to be met by the benefit of continuing," Mabuza said.
"There are bigger socio-economic prices to pay, there is also a lot of equipment and inputs that have already been brought on site which may need a big canvass to cover the staff should we decide not to proceed. But that does not seem to be an answer to provide for the gap of energy that Medupi and Kusile should provide. The decision is, we will continue to fix those design problems that we find on both, hopefully, complete these in a manner that will produce the intended output."
Last month, government conceded that the country's power crunch was largely due to a lack of maintenance of the utility's ageing infrastructure and that the power utility had not spent enough on maintaining its equipment over the past five years, while new plants Medupi and Kusile had not come on stream.
Public Enterprises Minister Pravin Gordhan had then said that the reasons for the delays at Medupi and Kusile were that the power stations were badly designed and badly constructed.
Mabuza said on Wednesday that it would cost around an additional R18 billion each to complete Medupi and Kusile, and that it would take at least another 60 to 66 months to do so. He added that Eskom estimates that the penalties it could pay to halt construction of the power stations would be around R8 billion.
"We have concluded that we would rather spend money to mitigate the costs of completion than not completing," Mabuza said.
Eskom, which supplies 95 percent of South Africa's electricity needs, has struggled with financial constraints over the years partly blamed on mismanagement and corruption which has seen some senior executives forced out.
African News Agency (ANA)