Biggest South African Coal Power Plants Are `Badly Designed’

JOHANNESBURG (Capital Markets in Africa) – Two new coal-fired power plants being built in South Africa, which will be the continent’s largest once completed, are “badly designed and badly constructed,” Public Enterprises Minister Pravin Gordhan said as the country reels under a third day of rolling blackouts.

State-owned power utility Eskom Holdings SOC Ltd. “encapsulates the challenge of where developmental state institutions can go wrong,” Gordhan told lawmakers in Cape Town Tuesday. The utility cut electricity supplies to prevent total collapse of the grid as unscheduled maintenance reduced output.

The Medupi and Kusile plants, which were supposed to add almost 9,600 megawatts to the grid and be fully operational in 2015, are still years away from completion. Their projected costs have more than doubled to 292.5 billion rand ($21.2 billion).

The return to blackouts compounds worries about Eskom’s precarious position and the threat it poses to the economy. It’s also an embarrassment for the ruling African National Congress just three months ahead of national elections.

Gordhan and Eskom Chairman Jabu Mabuza have approached Enel SpA, Italy’s biggest power utility, to provide technical help to assess the problems, and the company will send engineers to South Africa soon, the minister said in prepared comments sent by email.

Units belonging to at least six power plants including the two new facilities and Arnot, Kriel, Duvha, Matla and Grootvlei weren’t in service today, with Eskom having 27,305 megawatts of capacity available to meet peak demand of 30,033 megawatts, Gordhan said.

Source: Bloomberg Business News