Status Report On Capacity Expansion Projects

General: Status and progress on the build programme

The economic slowdown has caused a material downscale in electricity demands. With the current financial crisis and the revision of the Global Demand Forecast, several projects world-wide are being delayed and therefore these trends may evolve to a situation that might be slightly more favourable to Eskom.

Thus far, the Eskom Build programme is considerably well on track and given the uncertainty about future trends, Eskom will continue to pursue with most of its current projects and push ahead with the design and development of future projects. The new build programme will contribute to a net job growth (direct and indirect) and approximately 100 000 jobs will be created.

Although many risks have been identified, strong mitigating measures have been put in place. Risks to schedules and timelines have been identified and are rigorously being tracked by the formal project assurance system whereby schedule, cost, quality and safety risks are tracked in a structured manner.

To date a total of 2 224.3 km of line has been installed, 10 100 MVA�s commissioned and 4453.5 MW installed from inception to date.

Current planned capacity expansion (MW)

Project summaries

Return-to-service (Camden, Komati & Grootvlei)
This project consist of the return to service of the three previously �monthballed� plants, Camden (1520 MW), Grootvlei (1200 MW) and Komati (1000 MW) after a period of around 20 years in long-term storage. This exercise is being conducted in order to meet the short-to medium-term growth in demand, and includes detailed inspections and assessment of the condition of the machinery and the refurbishment and or replacement of components to ensure more reliable operating life of at least 15 years.

Camden (commercial operation)
All eight coal-fired units rated in total 1520 MW were returned to service. Unit 6 was the first unit to be commissioned on 16 July 2005. The last unit (unit 1) was commissioned on 31 July 2008. The total installed capacity will also be adjusted over time due to retro fit of equipment such as rotor blades to increase efficiency.

Grootvlei (execution)
Six units rated in total at 1200 MW need to be returned to service. The first unit (unit 1) was commissioned on 30 March 2008, the second unit (unit 2) on 27 March 2009 and the third unit (unit 4), is scheduled for commercial operation by end of May 2009 and optimisation and commissioning activities are currently taking place. The last unit (unit 1) is scheduled to be in commercial operation by the first quarter of 2010.

Work is currently underway on units 3, 4, 5 & 6 with unit 3 already achieving some significant milestones.

Some cost reduction initiatives are currently being undertaken by the project which includes the review of manpower demobilisation dates. The total savings thus far cannot be measured tangibly as yet.

Komati (execution)
This project involves the return to service of nine coal-fired units rated in total at 965 MW. The first unit (unit 9) was commissioned on 05 January 2009 and the second unit (unit 8) was commissioned on 31 March 2009. The last unit is scheduled to be in commercial operation by the last quarter of 2011.

Komati unit 4 will not be put into commercial operation for this financial year as a result of two months lost on the turbine auxiliaries including scope / design reviews that are late from the Engineering house that is dealing with this. The Engineering capacity issues are being reviewed to mitigate the situation.

Medupi power station � new coal (execution)
A green-fields coal fired base load power plant project in Lephalale, comprising of six units with an installed capacity of 4764 MW. Site accessed in May 2007 and terracing has commenced. The first unit will be commissioned by the first quarter of 2012, with the last unit scheduled for commissioning by end of 2015. These units are planned as direct dry-cooled units such as those at the existing Matimba power station.

Terracing is progressin well and good progress have been made on the Air Cool Condensors. Both the boiler unit 6 mass concrete and cleaning of the rock surface for unit 5 has been substantially completed and the HV Yards for Units 6, 5 and 4 has been handed over to the Medupi Execution team. The service station building excavations have been completed and handed over to MPS-JV and the first reinforced concrete at the steam turbine hall has been poured. On 19 September 2008, the coal contract was concluded with Exxaro.

Schedule forecasting has been sub-optimal on the project. In response to this, project management is engaged in intensive negotiations with MPS-JV, Alstom and Hitachi to improve the current forecast program to completion.
re-opening of negotiations for already placed contracts to ensure a 5% cost reduction.

The project will have an impact of 95% on the total GDP of the local town Lephalale and will contribute 0.34% to SA�s GDP growth per year. The total number of people on site including contractors is 3100 people.

Community projects and interventions currently involved with: local housing development; Marapong accommodation development; recruitment centre in town; upgrade to services e.g. sewage plant capacity; social upliftment through HIV/AIDS project as well as a member of the Lephalale development forum.

Kusile power station � new coal (execution)
Kusile Power Station comprises of 6 Units rated with a planned total of installed capacity of 4800 MW, just outside Witbank. This project is currently in the execution stage and construction activities started in April 2008 with the first unit planned for commissioning by end June 2013, where-after the other 5 units will follow with an approximate 8 months� intervals, with the last unit planned to be commissioned end of October 2016.

Terracing is in its 12th month. Partial handover of unit 1 and unit 2 has taken place from Roshcon to KCW-JV. Site services mobilisation is now completed and the main civil negotiations with joint venture have been concluded, site access has been granted. Manufacturing of the condenser bundles has commenced.

This project will have a direct impact on the total GDP on the local town Delmas of 25% and will contribute 0.34% to SA�s GDP growth per year. The current total number of people on site including contractors is 1200.

Community projects and interventions currently involved with: relocation of farm workers, training centre at Wilge, employment of farm dwellers & registration of a community forum.

Ingula - pumped storage (execution)
Ingula is a pumped storage scheme comprising of 4 units with a planned total of installed capacity of 1352 MW. The first unit is planned to be commissioned by January 2013 and the last unit in October 2013.

Progress on the project has been impacted by a shortage of civil contracting capacity, resulting in excessive prices after international tendering. Despite this, construction on the upper and lower reservoirs is progressing well as well as with roads and infrastructure with the majority of roads already handed over for final inspection. Substantial completion of the Main-Access-Tunnel (MAT) was achieved on 20 January 2009 and items on the completion certificate snag list is currently being attended to.

This project will have an impact of 1% on the total GDP on the local town Ladysmith and will contribute 0.04% to SA�s GDP growth per year.

Community projects and interventions currently involved with: Facilitation of quick refurbishment of Hamilberg Primary School; Facilitation and promotion of high-school maths and science programme; Involvement and planned liaison with local municipality council, the local Inkosi (Shabala), the top-site community, the District SAPS Management, department of education district director and the local farmers association.

Sere wind energy facility 1 project � west coast (execution planning)
On the West Coast north of the Olifants river mouth near the town of Koekenaap, east of Vredendal. The wind energy facility is proposed to accommodate 50 turbines, each 2 MW, for a total output of 100 MW. The turbines would be positioned over an area of approximately 25 km2.

The project is however on hold pending investment approval.

Mpumalanga projects
Kriel and Matla coal fired stations are being refurbished to extend their projected plant life. Both Kriel and Matla are in the execution phase, whilst Duvha is currently on hold.

Arnot capacity increase (execution)
This project will increase the Capacity of Arnot Power Station by 300 MW. Currently 200 MW has been commissioned onto the grid and another 100 MW is outstanding. The planned completion date for the last unit is 30 November 2010.

The first unit (Unit 3) was handed over to Generation on 17 December 2009 and the last unit is planned for completion in November 2010. Unit 6 performance testing commenced on 12 February 2009 and achieved sectional completion on 27 March 2009. Unit 2 was completed on 25 March 2009 resulting in an extra 50 MW being added to the grid. In the mean time, Unit 4 return to service continues to be delayed due to unavailability of feed pumps; however the unit was successfully synchronised on 26 May 2009.

Duvha (execution planning)
This project is currently on hold.

Kriel (execution)
The project will extend the life of Kriel Power station to enable it to operate until 2028. The planned Project completion date is March 2012.

Unit 1 & 6 capability testing and optimisation is currently underway and the target completion is end of May 2009, however, an outage is required on unit 6 to resolve HP bypass spray water leakage � an outage date has not yet been confirmed.

Majuba rail (execution planning)
This project is currently on hold. It would entail the construction of a 68km railway line between Ermelo and Volksrust, primarily used to transport coal to Majuba power station. Project completion was targeted for August 2009, but several challenges related to access, permits, servitude agreements, licences and funding were delaying the project. The project is currently in the execution planning phase and has been experiencing some difficulties pertaining to funding and outstanding approvals.

Community initiatives involved in include: Continuous of stakeholder engagement; Attend meetings called by different stakeholders to get clarity on the status quo which include:

Local Chief
Local councilors
Msukaligwa Municipality ( Municipal Manager)
Gert Sibande (Mayor)
Government Communication & Information System (GCIS)

Matla (execution planning)
Matla has to go through a mid life refurbishment process in order to be able to meet the life requirement of 50 years. The project completion date is mid 2014. Unit 2 was moved from 2009 to 2015. Unit 3 was brought forward to 2009. The majority of contracts have been placed.

Gas
The project comprised of Ankerlig � 5 x 148.3 MW units and Gourikwa � 2 x 149.2 MW units) and delivers 1039.9 MW in total.
Both Gourikwa units were in commercial operation on 28 November 2008, and all Ankerlig units came in on the following dates:

Ankerlig Unit 31: 19 February 2009
Ankerlig Unit 31: 04 March 2009
Ankerlig Unit 41: 23 March 2009
Ankerlig Unit 42: 26 March 2009
Ankerlig Unit 43: 31 March 2009

Power delivery projects (PDD)
Phases 1 & 2 consist of approximately 1461 km 765 kV line as well as the upgrading of substations and installation of new transformers. The project completion date is June 2011.

765 KV (execution)
Phases 1 & 2 consist of approximately 1 450 km 765 kV line, upgrading of substations and installation of new transformers. Target date for completion is June 2011.

Community initiatives involved include:

Development of 2 soccer fields and donating soccer balls, t-shirts and gear in Bultfontein and Bothaville (Mkhulu).
Building palisade fence around Bultfontein High School (Viscas).
Donation of a mobile library, furniture and a school hall to Sekgweng School (Viscas).
Donation of walking frames, wheelchairs and electric wheelchairs to Bultfontein Old Age Hospice (Optic 1).
Donation of a school pack per pupil (170) to Sekgweng School (Eskom Enterprises).

Northern projects: Duvha Leseding & Medupi integration
Duvha Leseding, excluding heritage area: as at 30 April 2009, 135.7km had been strung (77.4% complete). Increased progress has been identified on the project and the projected date for completing 180km is end August 2009. A lot of focus will be placed on stringing activities in the coming months.

Medupi 400KV yard earthworks have begun; however environmental approvals are still affecting projects in execution. A major concern has been identified around the Medupi Environmental Management Plan (EMP) and servitudes due in Jun/Jul 09.

The Duvha Leseding project identified a soccer field and pavilion to be built for the local community.