Eskom's Medupi Site Headed for 1-Month Delay

Eskom Holdings SOC Ltd., which supplies 95 percent of South Africa’s power, said work at its Medupi plant remains suspended, heading for a one-month stoppage because of labor unrest.

Building work at the plant in Limpopo province stopped on Jan. 16 when Eskom, South Africa’s main power utility, sent home 13,000 workers after protests involving members of the National Union of Metalworkers of South Africa and employed by Hitachi Kaefer and a unit of Murray & Roberts Holdings Ltd.

“The labor unrest and violent behavior are a material risk to delivery” of the project, Hilary Joffe, a spokeswoman for Eskom, said in an e-mailed response to questions. “The project is on a tight schedule to deliver first power to the grid by the end of 2013.”

Africa’s biggest economy is expanding its electricity-generation base to avoid a repeat of power shortages that halted mines for at least five days in January 2008. Medupi, which is due to start producing electricity at the end of the year, will be the world’s fourth-biggest coal-fired plant.

“We have not revised our timelines,” Joffe said.

Medupi will produce about 4,800 megawatts of electricity once completed. Capital expenditure for the plant was estimated at 91.2 billion rand ($10.1 billion), excluding capitalized borrowing costs, in Eskom’s annual report for the year through March 2012. The utility is seeking a 16 percent increase in average electricity prices each year until 2018.

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