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South Africa, hit by electricity shortages, opens first power station in 20 years

LEPHALALE, South Africa, Aug 30 (Reuters) - President Jacob Zuma opened South Africa’s first new power plant in 20 years on Sunday with a warning that the country’s perennial energy shortages were hampering economic growth.

Construction on the six-unit, 4,764 MW Medupi plant near Lephalale, about 350 km north of Johannesburg, was started in 2007 but the first 794 megawatts (MW) only came online this week after delays due to strikes, technical issues and cost overruns.

The state-owned power utility Eskom meanwhile is facing its worst crisis as it struggles to stem power shortages.

“Shortage of energy does not only cause enormous inconvenience, it is a serious impediment to economic growth. Today, I am here to say, there is light,” Zuma said on Sunday.

Medupi’s Unit 6 brings Eskom’s installed capacity to 45,000 MW, said Brian Molefe, Eskom acting chief executive of the utility.

Zuma had said on August 11 that power cuts were South Africa’s biggest challenge. They had shaved off one percentage point off growth and contributed to South Africa’s economic contraction in the second quarter of this year, he said.

Medupi’s first unit started contributing power during its synchronisation period from March 2 and the plant is expected to be fully operational by the first half of 2019 and contribute to one-eighth of South Africa’s total electricity capacity.

Once completed it will be the fourth-largest coal-fired plant and the largest dry-cooled power station in the world, the government said.

Its planned operational life is 50 years. Eskom budgeted 105 billion rand ($7.89 billion) for the entire project but said on Sunday it would be higher due to overruns.

As Eskom’s creaking power stations buckle under pressure, Zuma’s government is looking to introduce 9,600 MW of nuclear energy by 2030 into its strained grid to reduce its reliance on coal-fired power.

The price-tag of up to $100 billion for the controversial build, which aims to have the first 1,000 MW of atomic power online in eight years time, has been met with strong opposition.

Asked about delays, Molefe said: “We are going to have strict project management principles. We have to ensure that the timelines set are adhered to.” ($1 = 13.3000 rand) (Reporting by Peroshni Govender; Editing by Angus MacSwan)