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Eskom makes bad decisions: Chamber

Jul 09 2013 17:05

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Cape Town - Eskom's present problems with its new power stations and its inability to meet the demand for electricity are the direct consequences of a series of bad decisions, says the Cape Chamber of Commerce and Industry.

Viola Manuel, executive director of the chamber, said: "It's no use blaming the sub-contractors.

Eskom earlier said that labour unrest and under-performing contractors had made it unable to generate electricty from its newe Medupi plant until the second half of next year.

Democratic Alliance MP Natasha Michael said the setback came at a hefty price of about R10bn to taxpayers.

Manuel went on to say: “Eskom chose the sub-contractors and it is now apparent that it chose badly and then failed to monitor their work properly.”

She said the bad decisions go back to 1997 when the government first rejected an Eskom request to build a new power station which would be necessary to meet demand in 2007.

Former President Thabo Mbeki had apologised for this mistake.

Eskom made further bad decisions when it agreed to supply the aluminium smelting industry in both South Africa and Mozambique with low cost electricity even when it knew its spare capacity would be exhausted long before the contracts had run their term.

When Eskom decided to build new power stations it made more bad decisions.

Resistance

It chose to build giant bespoke power stations with 800MW modules instead of following international best practice of using smaller standard 300MW modules which are available “off the shelf”.

As former Eskom financial director, Mick Davis, told the Wits Business Schools in 2010 this would have been quicker and a great deal cheaper.

"What we find especially disheartening is Eskom's resistance to incentivising business to make use of industrial symbiosis.

"It's not just about being innovative in finding new ways to produce energy, but also about being innovative in how we use our current resources" Manuel said.

Peter Haylett, chairperson of the chamber’s industrial focus portfolio committee, said Eskom had rejected the concept of gas power stations when the Ibhubesi gas field was discovered off the West Coast.

Deadlines

Eskom and the government had also rejected gas powers stations fuelled by gas from the Kudu field off Namibia and imported natural gas.

Haylett went on to say: “The shocking thing about these decisions is that gas power stations can be built in two to three years and the capital costs are much lower than coal, nuclear or renewable electricity.

"We had an emergency situation and they rejected the obvious solution in favour of the long, expensive process of building bespoke power stations of their own design, despite the fact that they had lost a great deal of their technical expertise.

"Fortunately Eskom has now come round to the view that gas power stations are part of the answer for the future.”
He said Eskom had been a serial offender in missing deadlines.

After the crisis in 2008 it promised to bring the old moth-balled power station back on line. The refurbishment took longer than promised and it cost a great deal more than the initial estimates.

There were also questions about the maintenance of the national grid and the power stations during the time when Eskom focussed on producing a good bottom line for its shareholder, which is the government.

 - Fin24

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eskom  |  natasha michael  |  cape town  |  electricity
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