Confidential Eskom documents show potential Medupi meltdown
Correspondence sent between senior Eskom executives, including confidential e-mails and memos, reveals that Eskom's proposed Medupi power plant could precipitate an irreversible environmental catastrophe, even while Eskom's senior management appears to be sitting idly by, unwilling to take action.
Confidential e-mail correspondence between our source and Eskom executives, including Vule Nemukula, general manager of Eskom Procurement and supply chain management, reveals that the projected future water needs for the area, following completion of Medupi, could be up to 500% of the current usage level. The situation is so serious that our expert warns that Hartebeestpoort Dam "will be pumped dry in 90 days during winter" if the current plan for supplying water to the plant is put into place.
This is the same source who, earlier in the month, documented in clinical detail how Eskom CEO Jacob Maroga had received warnings of an impending coal crisis just six months prior to the rolling blackouts of early 2008.
Our source also reveals that the cost of running the power station will be far higher than budgeted for - implying further energy rate increases to make up for Eskom's poor budgeting. Shockingly, the current projected capital costs only include a single pipe without backup - leading to concerns not just over financing, but also how seriously Eskom is considering safety issues.
Meanwhile, irreversible environmental damage will ensue if the power plant sucks up water from the surrounding areas, including Hartebeestpoort Dam, and the contingency plan that Eskom has in place - pumping water from boreholes - would "only last for a short period and is not sustainable."
The DA is also in possession of a confidential memo sent to Mr. Maroga, Eskom's CEO, raising serious concerns about an array of glaring mistakes made in the procurement of physical capital for the Medupi power plant. Once again, it is unclear whether Mr. Maroga has taken any appropriate steps to act on this information.
Some of the key findings of the report include that:
- International best practice for the negotiation process that precedes the actual procurement has not been followed;
- Eskom committed to a detailed boiler specification without securing a coal source beforehand;
- Water is scarce at the site of the power station, and the additional costs for coal washing, transportation and water has not been factored in; and
- Maintenance costs and TCO (total cost of ownership) have not been considered for the physical capital.
(Copies of these documents can be downloaded here - PDF - and here - TIFF.)
Government needs to be held to account for this kind of mismanagement that endangers a precious ecological system and threatens to waste hundreds of millions of rands. I will thus immediately submit questions to the minister on these shocking revelations, and also write to both the CEO of Eskom, and the Minister, demanding answers.
If Eskom has formulated a comprehensive and realistic plan to deal with the water shortage at Medupi, this would be a good time to share it with us.
Statement issued by Cobus Schmidt, MP, Democratic Alliance, September 27 2009
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