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'Medupi must teach Eskom a lesson'

Minister Gigaba says the delay is about more than holding companies accountable.

FILE:Minister of Public Enterprises Malusi Gigaba speaks at a news conference in Kempton Park on 15 October 2012, following an annual general meeting of the South African Airways. Picture: Werner Beukes/SAPA

JOHANNESBURG - Eskom must learn a lesson from the delays at the Medupi power station, Public Enterprises Minister Malusi Gigaba said on Thursday.

On Monday, Eskom announced the plant would not be ready on time and that the project would only be completed in the second half of 2014.

The first electricity from the power station was initially due to come online at the end of this year.

Gigaba says the setback is about more than just holding companies accountable.

"Necessary lessons have to be drawn from the Medupi implementation in order to guide our actions going forward."

Gigaba said on Wednesday that he's "extremely disturbed" by the delays.

The delay has sparked fresh fears of load-shedding and has led to the cost of the project swelling by more than R10 billion.

In May, he vowed that no delays would be tolerated and that heads would roll if the deadline wasn't met.

He says the team will travel as far as France to confront contractors responsible for the delay.

Gigaba also says independent consultants will be brought in to assess the situation.

The minister said the moment he was informed about delays at the station, he stepped in to put pressure on everyone involved.

He also instructed Eskom to share the news with the public and to take urgent action.

At the same time, Eskom's finance director Paul O'Flaherty has tendered his resignation with immediate effect.

O'Flaherty has slammed the local construction industry.

"The way people are set up on site and the way labour is trained, supervised and treated is just not acceptable."

TWO YEAR PLAN

Eskom CEO Brian Dames says he's not going anywhere.

Dames says there are no plans for load-shedding or tariff hikes despite the delays at Medupi.

He also says the power utility has a two-year plan to deal with its debt crisis.

Speaking to 567 CapeTalk/Talk Radio 702's Bruce Whitfield, he said the power utility was struggling to pay off debt because it was not able to charge the prices it should.

The electricity supplier's debt amounts to R225 billion.

Company results released on Wednesday showed Eskom was still achieving profits, even though it was lower than in 2012.

The results further revealed an increase in revenue from the R115 billion in 2012 to nearly R130 billion in 2013.

Profits dropped by R8 billion in the same period to R5.2 billion.

SABOTAGE

The National Union of Metalworkers of South Africa (Numsa) says it believes some of the contractors working on Eskom's Medupi power plant may be deliberately sabotaging the work there.

Numsa's general secretary Irvin Jim says it's clear something's gone badly wrong at Medupi.

"The greatest problem we may be sitting with is sabotage."

Jim claims delays are good for these firms.

He says the number of companies trying to manage the site is an indication of this.

"The more the construction is being postponed the more these companies continue to make money out of the project."

Eskom claims one of the main reasons for the delay is labour unrest.

It has also blamed the delay on underperformance by contractors and critical technical challenges to the system controlling the power-plant.

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