Medupi: A story of smoke and mirrors, debt and derangement
by David HallowesWhen it comes to Eskom and the World Bank, the new deal looks very much like the old deal – except with a fresh coat of green eco-friendly paint that is already flaking off.
Eskom’s new build programme was in trouble from the get go. That sinking feeling started with the foundations at Medupi, the fourth biggest coal-fired power station in the world, as Eskom liked to boast, and too heavy for the ground beneath it. More concrete was poured. Then, another boast: Medupi would use up 800,000 cubic metres of concrete, with half a million cubic metres of sand – sand removed from the Mokolo River sand aquifer. That did it for the aquifer.
Eskom promised a dirty plant. “There is a relative lack of pollution in the Waterberg,” said Eskom’s then boss. With a hundred year history of solving the lack of pollution, doubling up on the dirt from the neighbouring Matimba power plant, built in the 1980s, was a no-brainer. Together, the two plants would pump 758 thousand tonnes of SO2 – sulphur dioxide – into the air annually as soon as Medupi was up and running at full blast. By 2015, they said.
On the Highveld, by contrast, Eskom had achieved satisfactory levels of pollution and could therefore build Kusile with sulphur scrubbers – the first on any Eskom plant. Sulphur is one thing. Carbon is another. Medupi and Kusile together would add 60 million tonnes of CO2 to Eskom’s already generous annual contribution of 225 million tonnes to global destruction.
The money side of things was also fouled up from the start. At Medupi, things went from bad to the World Bank. A year after Eskom bulldozed the bushveld, the Wall Street rating agencies sniffed at some bad maths: Eskom could not recover the capital costs of its new monster without a monstrous hike in tariffs. So began Eskom’s journey to junk.
In a marginal vignette on how Wall Street collapsed the global economy, the barking dogs of capital added their own bad maths: South Africa couldn’t afford the hikes they wanted. Serial hiking followed, but never enough for Wall Street, and always too much for Eskom’s customers. So began the ride into the spiral of death.
That’s when the World Bank stepped in with its smiley face on – never mind the whiff of corruption blowing over from the double-barrelled House of Chancellor-Luthuli – to rescue the project of doom with a $3,75-billion loan.
That was 2009, when $3,75 billion was worth about R29-billion and Medupi was to cost R79-billion. So the World Bank was putting down well over a third of the price.
That was 2009, just as the serial price escalations were taking off, when R79-billion still sounded like a lot of money.
That was 2009, when the Copenhagen climate negotiations were supposed to ‘seal the deal’ but were actually heading for the shoals of coal on a flood of oil.
The Big Green World Bank was there, of course, punting its role in ‘carbon finance’ and pushing one false solution after another. Save capital. Bugger the climate. Paint it green.
First up was carbon trading – the notion that not doing something bad in one place can be exchanged for doing it in another. So you can sell the carbon you did not emit from a project you did not do to someone who wants to subtract it from what he actually does emit so he can say that he doesn’t. Perfectly clear.
Next, the Big Green World Bank amped up the volume on the song of ‘clean coal’, recently released by the R&R advertising agency, the US coal industry’s leading peddler of fake. That was genuine fake, that was. Not the fake fake of more recent times. The backing tracks were by Kool and the Gang.
But the damnedest thing about fake is that it needs a crumb of real. With its biggest ever African loan going to build a dirty great coal station – the fourth biggest in the world – the Big Green World Bank needed something to squeak clean. So it threw a couple of renewable plants into the deal – one of which Eskom has actually built. And it said that Medupi must scrub out the sulphur. But not from the first firing. They did not, after all, want to hold up construction. Eskom could install the scrubber on each unit as it came due for its first major service after six years of operating at full pollution.
Eskom has bitched and moaned ever since: it costs too much, it needs more water at more cost, it needs limestone quarried and railed in at extra cost, it adds to the waste stream at more cost. Too true. With coal, fixing one problem always makes for another. If you want it clean, don’t dig it, don’t burn it, don’t frack it.
Six years wriggle room became twelve and R79-billion became R225-billion, and the wriggle room soon turned to wriggling out – just as the critics of the deal said it would. Maybe Eskom and the Big Green World Bank thought we’d forget.
Now Eskom has dreamt up the Totally New Green Deal. How about we don’t put scrubbers on Medupi but close some dirty old power stations instead? Pretty good, really. A free pass to pollute the Waterberg for another 60 years, putting about 360 people into an early grave every year, in exchange for shutting down power stations where half the units are already shut down and the rest are due to shut down soon.
Could things get more odorous? Indeed they could. Eskom has just let it be known that the already half-shut stations may get a life extension to 2030 – never mind that they aren’t worth the cost of the overhaul. But maths is magic. First, add 10 years to four or five plants, then close the plants 10 years early, then subtract what they would have emitted in 10 years from Medupi’s pollution. Just like carbon trading, really. A neat deal to negotiate with the Big Green World Bank. DM
David Hallowes
David Hallowes is a researcher at groundWork, an environmental justice organisation.
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