SPX Wins $235 Million Contract in South Africa’s Volatile Power Scene

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Researched by Industrial Info Resources (Sugar Land, Texas). The electrical power generation scene in South Africa has three dimensions. The first, currently staring all citizens and businesses in the face on a daily basis, is major ongoing load shedding. All areas and major centers, including the country’s commercial and industrial capital, Johannesburg, are regularly enduring power-outs lasting two hours in the morning and often another two hours in the afternoon plus a third in the middle of the evening. It is reported that Eskom (Johannesburg), the country’s power utility, has 10,000 MW (over 25% of total capacity) of under maintenance and the load shedding program could continue for a further week or weeks. Retailers, already facing a difficult Christmas, are feeling the effect, businessmen are tearing their hair out and traffic gridlock chaos makes road rage an option for the mildest of motorists.

The situation has brought an unprecedented apology from president Thabo Mbeki who has admitted on national radio that the government should have taken Eskom’s advice some years ago and invested in more generating capacity to keep pace with economic growth. “When Eskom said to the government “”We think we must invest more in terms of electricity generation’, we said no, all you will be doing is just to build excess capacity. We said not now, later. We were wrong. Eskom was right,” said Mbeki.

The second dimension is the medium to long term plan to add capacity to the grid. $22 billion will be invested in new projects over the next five years and the target is to add 40,000 MW to the current capacity of 38,000 MW by 2025.

Contracts are being awarded for the 4,800 MW major base-load, coal fired $11.8 billion Medupi project in the north of the country which should be in full operation by 2015, with the first of six units operational in 2011. For related news item see November 16, 2007 – Eskom Signs Contracts with Hitachi, Alstom for 4,800 MW Plant.

SPX Corporation (NYSE:SPW) (Charlotte, North Carolina) has just been awarded a $235 million contract to supply a range of components for the Medupi project. These will include filters and air preheaters and the manufacture of pressure parts for all six of Medupi’s 800 MW boilers. The environmentally friendly filters and air preheaters will assist in reducing emissions and enhance productivity according to SPX executives. The company is investing in its manufacturing plant and employee base to build business in South Africa.

The third dimension consists of crisis plans being mooted to keep the load shedding down to a minimum or even overcome power rationing with short term measures. Eskom have said that they will use all emergency resources including the use of peak supply gas turbines and will also buy back power from large industrial customers. There is also pressure on regulators to allow more space for independent power produces and give them security of development and operation to motivate power solutions in terms of new smaller sized base load units and fast track packaged gas turbine installations which could be in operation within a year. With infrastructure and service challenges to be faced in hosting the 2010 World Soccer Cup South Africa needs to use its legendary national characteristic of ‘making a plan’ to meet pressing power contingencies.

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