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The other side of the messy R8bn Medupi, Kusile story

It is painful to see how the plant is operated, says supplier.
An earlier picture of the Medupi construction site near Lephalale in Limpopo. Picture: Moneyweb

Much of the responsibility for the state of the dust handling plant at the Medupi and Kusile power stations should be assigned to Eskom Generation rather than the contractor, says Jeremy Kirsch, managing director of Clyde Bergemann Africa (CBZ).

Kirsch on Monday responded to statements made by Eskom general manager for Group Technology Titus Mathe on Friday at the Nersa public hearing about Eskom’s application for an annual 15% tariff increase for the next three years.

Mathe gave details about “design defects” and “process and people issues” at Eskom’s two new power plants. He said the problems would cost R8 billion and take several years to fix.

Among other things, Mathe referred to high ash accumulation at the dust handling plant as well as leaks, poor commissioning and lack of spares due to business constraints at the original equipment manufacturer (OEM). The plant requires more frequent maintenance, he said.

CBZ is the supplier of the dust handling plant at both Medupi and Kusile. It does the installation and supplies the spares.

Kirsch confirms the high ash accumulation and describes the situation as “abysmal, embarrassing” and a huge environmental problem.

Eskom should however also look at itself to find the reason for this situation, he says.

Similar plants have been functioning well at Eskom’s Matla and Kriel power stations since the 1980s and have been successfully installed at several power stations in China.

Kirsch explains that CBZ staff have been intimately involved in the running of the plant during the handover period to Eskom Generation, the division within Eskom that operates the units in the long run.

At Medupi Unit 6, the first of the new units to be completed, this handover period was nine months. At two subsequent units, with the first completed at Kusile, it was shorter. During this period CBZ was responsible for operating the plant, monitoring the operations, responding to maintenance requirements and maintaining its own equipment.

All went well, he says.

Once Eskom Generation took sole control, however, things started deteriorating, says Kirsch.

He criticises the way Eskom staff operate the system. They put stress on the plant that could lead to increased wear and tear, equipment failure and blockages that could result in the non-functioning of the plant, he says.

Inadequate monitoring

According to Kirsch, the Eskom operators sit in the control room and rely on the data relayed to them on the computer screens. “In addition to relying on the screens, one should also walk around and observe, look, listen, smell,” Kirsch says.

Inadequate monitoring means one only picks up problems when they are significant, he says.

After all, one wouldn’t ignore a funny sound your car is making even though the warning light on the control panel is not on, he says.

When something does go wrong, Eskom is slow in doing the required maintenance, Kirsch says. “Ash is abrasive. It will grind things away quickly,” he says. Nevertheless, things are left for days while ash is being spewed all over. By the time the problem is fixed, the damage is enormous, he says.

According to Kirsch, the quality of Eskom’s maintenance is bad. He says CBZ was hoping it would get the long-term maintenance contract as it does similar maintenance work for Eskom at eight of its other power stations.

Eskom however decided against putting the contract out on tender and appointed its own subsidiary Roshcon, which has been responsible for the maintenance on completed units since September 2015, Kirsch says.

CBZ staff are still on site, working on the later units. They point the problems they see out to Eskom Generation, but nothing happens for days, he says.

“It pains us to see what is happening.”

Problems at the fabric filter plant also place demands beyond its design requirements on the dust handling plant, Kirsch says.

About Mathe’s statement that there is a lack of spares for the dust handling unit due to “business constraints” at CBZ, Kirsch says the company is indeed battling, but there is more to this than what Mathe lets on.

When CBZ got the initial contract for the dust handling system in 2009 it gave Eskom a comprehensive quote for the spares it should need in the first two years of operation.

Eskom did not buy the spares but, until a few months ago, has been borrowing spares from CBZ that were earmarked for the construction of the later units. CBZ even had to borrow spares from Kusile for Eskom to use during emergencies at the units in commercial operation at Medupi, Kirsch says.

He confirms that CBZ now experiences pressure on cash flow, with the outstanding R170 million from a R240 million claim it submitted against Eskom at Kusile being a big contributing factor.

Eskom’s deaf ear

“We have been trying to speak to senior people at Eskom since early 2017, because we have been losing R5 million per month jointly on Medupi and Kusile,” he says. He explains that the bidding for the original dust handling plant contract was competitive and the margins slim. Contractors were never able to recover costs incurred due to delays caused by among other things protracted strikes at Medupi.

Many sub-contractors went out of business and when CBZ tried to replace them, bidders added a 40-50% premium to their quotes. Word travelled fast about the chaotic and commercially damaging conditions on site and they therefore built in a significant risk premium.

He says part of the costing for the project was done on a fixed period, and with the job running more than twice the estimated 54 months, CBZ is indeed in serious financial difficulty.

Against this background it leaves a sour taste that Eskom takes absolutely no responsibility for problems at Medupi and Kusile, but instead makes statements in public that reflect negatively on the companies that are already bearing the brunt of its badly managed project, Kirsch says.

Watch Mathe’s interview with Moneyweb:

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Maybe time to have a serious look at Koeberg. Can we really trust Eskom to run a nuclear power plant?

As horrible the unbridled looting and mismanagement are it is only money. A mishap at Koeberg could however lead to utter devastation and tragedy.

Was thinking the same thing. Koeberg has French reactors. If you ever owned a Citroen or a Peugeot then you’ll know how delicate French machines can be. Wonderfull machines too, but they require a lot of love, and reassurance in the shape of fastidious maintenance and gentle operations with silk gloves. Don’t know if

On the upside, a meltdown at Koeberg might cause Cape property prices to dip a little. This brief dip will give opportunity to people from Gauteng to stretch their Valiedollars and seize a rung on the Cape property ladder, if they’re quick to snap up the bargains.

Already I saw the real estate agents at work:

“Are the summers days in the glorious Cape just not long enough for you? Do you still want to play when the sun wants to go to bed? Do you see opportunity where others see only disaster??If that’s the case then we the opportunity of a lifetime for you!

Buy a stand in the Koeberg Blast Zone Extension 7 !
Become part of an exclusive community where the sun never sets!

All stands located on the crater rim with sweeping views over ground zero.
Enjoy the eternal sunshine of the Reactor No 2. Never switch on a light again! Never pay another Eskom bill. Enjoy FREE radiation for years*

Come and feel the warm glow for yourself!
Call Joe to make an appointment today!

* Actual duration of radiation glow might differ. Current estimate is approx 100-200 millions years. Daily yield never below 200 Rads.

Love it. 🙂

No Milo, my English friend, kindly set your pet hate for everything French aside 😉

Compare the same country’s unrelated industries to each other?? So what you’re saying, one needs to be very worried when you fly on a modern Airbus, because it’s French. I think Mirage-sales success has beaten many arms manufacturers over the years.

If one use motor vehicles as a yardstick, then thank heavens Koeberg is not a British design. What would you do with all the leaking oil into the pristine shoreline?? 😉 like a good ol’ Landrover, Triumph, Rover or what not. Power-plant repairs daily…

At least you can I can by happy it’s not designed by the Italians! *lol* But if Koeberg lasts as long as a Vespa, who will complain? 😉

The best way to distance yourself from anything French, is to painfully leave out 40% of the English grammar (which originated from “langue française”). Oh dear! You have a stronger French connection than you think: just speak English! *lol*

I live quite close to Koeberg and I have heard it on good authority that the only reason why it hasn’t blown up yet, is because the French built so many controls and fail-safety mechanisms into the plant during construction.

Not only a surplus of 35000 workers, but lazy and incompetent as well. Maintenance over the years was always a problem, not only at Eskom. I do not see how this mindset is going to change. Perhaps everything should just fail and we start over and operate at a level that is comfortable to all. Have a look at the electricity boxes at Vereeniging CBD. Street circuit breakers fuses are replaced by thick steel cables. What happens when overloading, electricity cable burn and substations explode.

Every farmer in South Africa knows the following formula:
Level of sophistication of facility and equipment – level of sophistication of operator = size of disaster.

We can state the formula is another way: Nuclear Power Facility + Cadre Deployment = Chernobyl

The ANC is about to experience practical implication of this formula soon.

“Low tech people, working on high tech equipment”

That was the wording from someone in the local aviation industry some years ago, when (careless) ground staff at OR Tambo Airport operating the mobile stairs-truck, or was it a catering equipment pallet-hoist, damaged one of the side-windows of a stationary airliner.

Multiply by 1000% & reapply to Eskom.

Many “damaged windows”….

Eskom is 75% overstaffed, untrained, incompetent and on fat salaries, incentives and perks. Lay them off!!!!

Typical ANC style. Blame ,lie and deny.

I constantly get this very peculiar feeling that the State has a tendency to appoint people to operate sophisticated systems while they should not even be appointed to operate a lawnmower. Hope I’m wrong…

It is called “cadre deployment”.

Cadre improvement= When promoted.

It is always going to be a problem where inexperienced, incompetent and lazy people are employed, and there is a vacuum created by a lack of leadership …

‘significant risk premium’ or possible price fixing (which is illegal)? Yes, Eskom is largely to blame but I guess there could be many many contractors/suppliers/subcontractors/etc. taking Eskom for a big ride and squeezing all the money out of the utility that they can – which would be a big shame.

This point to the incompetence of those who structured the tender – and as atypical of ignorant government entities they probably brought in external tender writers because they themselves had no idea as to how or what they wanted in the tender document. It is also patently obvious that Eskom have not got a clue on how to project manage these operations – yet when old man Maree was in charge Eskom had some of the finest project managers in the country

Fair points – fully agree with you. I am talking about the big players (Hitachi’s, ALSTOM’s, etc.) dominating the market as well as the prices (including all their underlying contractors, subcontractors, subcontractors, etc; everyone seems to have their hand in the pie), where 80% of the materials/ spares is also being imported from oversees and localisation is not happening where it can boost the economy (GDP, job creation, etc.)

Dear WillemConradie

Your point of Eskom getting ripped off by suppliers and contractors of all forms is valid and I agree that this can and possibly does happen. The comments that I make arfe related to hard working ethical honest enterprises who possibly have signed onto the World Bank Fraud and Corruption clause in the Medupi and Kusile contracts as I have done on Behalf of our Company in 2010. I in no way represent speak for any other company and confirm that my company operates under exctremely transparant ethical principles. Thank you for raising a valid point.

If you want to know how this government will run the plant, you just need to look at our submarines and frigates rotting in Simonstown harbour. Or our jets we can’t fly anymore.

This is not going to end well

If only the government worked with society instead of being determined that other races must be excluded look at the mess that happened. Now all woes are blamed on others. Can’t believe it. Bring in some qualified engineers and make this thing happen. Make sure there is a financial officer controlling all the purse strings and reporting monthly to management. What is so difficult about that. Oh and don’t forget about recovering outstanding debt from Soweto.

Don’t think they are capable to distinguish between day to day running cost and capital costs – Repairs and Maintenance is for sure not in their vocabulary, not even talking about their accounting system and bad debts – direct result of empty political promises.

I take a small issue with the “race” part noting that Hanekom, Slovo, Davies, Erwin etc were as useless as their darker hued companions in crime. The problem is ANC cadre deployment. Cyril appoints his chum who knows nothing about power stations, the chum appoints his chum who knows less and so it goes; pretty much following the demographics of the ANC leadership. The culture of incompetence and theft without blushing runs deep.

I see it this way: If I buy myself a brand new Rolls Royce but in stead of putting in petrol in its tank, I put diesel in I must certainly expect lots of engine problems. The eskom crowd can go for educational lessons on how and with what type of coal a coal-fired-power station’s furnace is stoked with and lots more

Kirsch is indeed correct about operators sitting in control rooms and not doing plant walkdowns. They want to do everything by remote. It has become a problem on a lot of their stations. Saw some stats on boiler trips/quarter and how that figure went up since the late 1990’s

I also saw first hand the poor maintenance on ash conveyors at one of the stations – loose idlers or some of them even lying on the ground. It is inexcusable.

It also did not help that Eskom ran out of spare generation capacity around 2008 and most probably had to run the plants harder to keep the lights on.

Transformation Uber Alles!

Yup, TRANSFORMATION is what counts. That’s why I’m not worried about operational or financial woes of Eskom. They achieved what they set out to do.

Cadre Deployment and Transformation achieved its goal – a quantum leap into the abyss of incompetence and theft

According to Kirsch, the Eskom operators sit in the control room and rely on the data relayed to them on the computer screens. “In addition to relying on the screens, one should also walk around and observe, look, listen, smell,” Kirsch says.

Well, there it is! People who work there are simply too lazy to do their jobs properly. Better to sit on yr backside all day and eat donuts. One is reminded of Homer Simpson at the nuclear power plant! It’s a total farce… all those billions being destroyed by incompetent people who can’t be bothered.

Is this not the same story in every govt-run entity. Its a job for life, so who the hell even bothers to try?

Why spend money on maintenance when you can give yourself and all your cadres fat bonuses…

It is painful to see how the ANC operates the SOE’s and the country’s finances.

“Eskom takes absolutely no responsibility for problems at Medupi and Kusile” – that should be Africa’s slogan, paraphrased accordingly. Always was, always shall be …

End of comments.





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