Eskom Cancels Alstom's Systems Contract at Medupi Mega-Thermal Project

Written by Richard Finlayson, Senior International Editor for Industrial Info Resources (Sugar Land, Texas)--The schedule for the completion of South African state power utility Eskom's (Johannesburg) mega-thermal power station continues to unravel. Alstom's (OTC:ALSMY) (Paris, France) boiler system protection contract is reportedly to be cancelled, and a new contractor will be called in to take over the work. The new contractor is believed to be Siemens AG (NYSE:SI) (Munich, Germany).

Early reports quoted an Eskom spokesman as saying that the two companies would work in parallel, but that could have been a face-saver for Alstom.

A year ago, Eskom announced that the Alstom boiler protection software had failed factory acceptance tests in France. The system failed the same tests a further three times in the past year. Meanwhile, Hitachi had to conduct a re-weld program on boilers which had been found to be faulty.

Another change in plans at this stage of the 4,800-megawatt (MW) project could see the date for delivery of the first power from one of six units postponed again from the current date in the second half of 2014. The original date for power delivery was 2011, but a mix of labor problems and unsatisfactory execution of work has caused the delays. Hitachi, which holds the boiler contract, had to conduct a re-weld program when faults were found.

For related information, see November 13, 2013, article - Eskom Fines Hitachi, Alstom for Medupi Project Delays, and July 10, 2013, article - Eskom Lambasts Alstom, Hitachi as Medupi Mega Thermal Power Plant Continues to Face Delays.

Alstom has other contracts for control and instrumentation, both at Medupi and the second mega-thermal, 4,800-MW project Kusile. Both power stations were scheduled to be in full operation by 2018, bringing relief to South Africa's strained power supply. To date, there have been no official indications whether all, or some, Alstom contracts will be affected.

Industrial Info Resources (IIR), with global headquarters in Sugar Land, Texas, three offices in North America and nine international offices, is the leading provider of global market intelligence specializing in the industrial process, heavy manufacturing and energy markets. Industrial Info's quality-assurance philosophy, the Living Forward Reporting Principle™, provides up-to-the-minute intelligence on what's happening now, while constantly keeping track of future opportunities.