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Ministry of Minerals, Energy and Water Resources (MMEWR)
Minister's Statement to Parliament on Morupule B Power Stati...
01/03/13
Minister's Statement to Parliament on Morupule B Power Station

 

 

UPDATE ON THE PROGRESS MADE IN THE BRINGING INTO SERVICE OF THE 600MW MORUPULE B POWER PLANT

 

 

1.0              BACKGROUND

 

1.1              Madam Speaker, I thank you for allowing me to apprise the Nation through this House on the progress that has hitherto been made to bring into service 600MWMorupule B Power Plant and in so doing address the current serious power supply and demand mismatch, which is affecting the country’s economy.

 

1.2              Madam Speaker, allow me to give a brief background of the Project.

 

The Botswana Power Corporation (BPC) concluded an Engineering Procurement and Construction contract, for the development of the 600MWMorupule B Power Station with a consortium of the China National Electric Equipment Corporation (CNEEC) and the Shenyang Blower Works Electro-Mechanics Import and Export Co. Ltd (SBW), collectively referred to as CNEEC-SBW Consortium on 15th November, 2008.

 

Fichtner GmBH & Co. of Germany are BPC’s Owner’s Engineer and are responsible to ensuring the delivery of the project.

 

1.3              Madam Speaker, contractually, the original timeline for completion of the power station is as follows:

Item

Unit

Contractual Completion Date

1

Unit 1

15th January 2012

2

Unit 2

15th April 2012

3

Unit 3

15th July 2012

4

Unit 4

15th October 2012

 

 

 

 

1.4              Madam Speaker, the total cost of the 600MWMorupule Power Project including the associated infrastructure is P11.1billion.  This is the largest single and most complex project that has been undertaken in our country. 

 

2.0              Madam Speaker, the target dates that I have just outlined have not been met for various reasons such as truckers strike action in South Africa (which barred movement of equipment from Durban to site), inclement weather in 2010/11. The delays were, however, compounded by other problems encountered during commissioning, which included, among others, blockages and a steam tube leak on boilers 1 and 2 respectively.  Contractor’s non compliance with the Safety, Health, and Environmental (SHE) standards did also contribute to the delays.  After May 2012 to date, a number of problems surfaced both technical and legal, the key ones being:

 

a)      the Main Contractor’s failure to comply with Safety, Health and Environment standards, which resulted in three fatalities;

 

b)      boiler failures, albeit not quite similar, became frequent;

 

c)      the project was behind schedule, with telling effects on the BPC’s finances, with the commissioning of the first Unit being more than 12 months behind; and

 

d)      technical integrity of the plant was in question.

 

2.1              In response to the SHE non-conformance, BPC has undertaken various actions to improve safety at site, and these include: -

 

(a)               suspending all work at height activities;

 

(b)               increasing site verifications and checks;

 

(c)                increasing the number of security personnel at the site to strengthen the enforcement;

 

(d)               appointing a professional SHE Firm (NOSA) to assist in implementation of the SHE plan;

 

(e)               appointing a specialized third party firm to erect scaffolding at site that conforms to the safety standards and applicable regulations; and

 

(f)                 ensuring that a higher level commitment of senior management, by action such as invitation of senior BPC management and CNEEC’s president to discuss and secure commitments to handle SHE issues among other issues.

 

2.2              Madam Speaker, concerning the boiler failures and technical integrity of the plant, the Government agreed with the World Bank to the appointment of aurecon AME Limited to undertake a quick two week audit of the plant.  The quick audit revealed that for the major pieces of equipment there were “no fundamental design flaws” that would contribute to inadequate operation.

 

Some key information on the major plant corroborates with aurecon’s AME Limited findings that there are “ no fundamental design flaws” that would contribute to inadequate operation of the power plant.  The key technical information on the major pieces of equipment is:    

 

 

ITEM

MANUFACTURER

LICENSEE

Turbo Alternators

Shandong Jinan Power Factory

ABB

Turbines

Dongfang

Siemens

CFB Boilers

Wuxi

Lentjes design

 

 

2.3              Madam Speaker, the audit recommended a detailed analysis of the plant especially the boilers.  Already the two units that have so far undergone performance tests have had boiler problems. To this end, the Government of Botswana has decided to beef up BPC management oversight capacities, by employing Aurecon AME Limited. The engagement of Aurecon was motivated by their proven track record.

 

2.4              Madam Speaker, it has also been decided that Norton Rose should be engaged as legal advisers to address the contractual matters as well as Operation and Maintenance contract.

 

Norton Rose and Aurecon will be engaged for 7 months, at an estimated total cost of P14.8million to strengthen BPC Project Management oversight.  Through the engagement of both Aurecon AME Limited and Norton Rose, which is nothing but a tactical intervention, it is hoped that a firmer project oversight will result in the power plant being delivered in good time to address the current serious power supply and demand mismatch.

 

 Furthermore, bringing on board Aurecon AME Limited will go a long way to reducing GoB’s Liquidated damages, as they will offer technical advice.

 

2.5              Madam Speaker, in the medium/long term the BPC Board in consultation with the Ministry has seen a need for the engagement of a reputable international firm to manage BPC on a two to three year Management Compact.  To this end the Board is in discussion with the Electricity Supply Board International (Pty) Ltd

 

3.0              Madam Speaker, I wish to report on the state of the power plant;

 

3.1       Unit 1 was shut down on the 15th January 2013 to attend to some teething problems i.e. steam leaks, air leaks, operations problems in the limestone system and some ash system leakages.  These items have been attended to. Barring the unforeseen, the Contractor has indicated that unit 1 would be ready by mid-March 2013.

 

3.2               Madam Speaker, Unit 2 was shutdown on the 16th January 2013 on account of a water leak inside the boiler sub-systems.  This work is currently on-going and is expected to be completed by mid March 2013. 

 

3.3              Madam Speaker Unit 3 is currently generating power and is connected to the BPC transmission system and has completed the prescribed tests on Tuesday 26th February 2013.

 

3.4       While after the tests the three units will be available for operation, the Contractor has no obligation under the existing contract to operate the units.  Discussions are on-going to have the units in operation while conditions for taking over are being fulfilled.

 

3.5              Madam Speaker, Unit 4 is still under construction/erection.  Some commissioning activities are also on-going.   Most of the remaining works entail lagging/insulation.  Due to safety concerns, all work at height has been suspended starting on the 15th October 2012.  The suspension order for work at height is being lifted for areas where proper/safe scaffolding has been erected.  Works on Unit 4 are being executed; however delays on account of safety considerations have been or are being experienced.

 

The contractor is forecasting the synchronisation to happen in March 2013.  Thereafter, Unit 4 will undergo prescribed tests before being declared ready for commercial use.

 

 

5.0       CONCLUSION

 

5.1              Madam Speaker the telling effects brought about by the inordinate delay in bringing the power plant into service have been severe, characterised by prolonged and widespread load shedding.  I am aware that this has brought suffering to people in all walks of life. 

 

5.2              The Government’s main focus is to bring the 600MWMorupule B Power plant into service in as short a time as possible.  The problems have been indentified and remedial action is being taken, including strengthening of the BPC Project Management Staff.    

 

5.3              I am in continual communication with my South African counterpart on the challenges our country’s Electricity supply industry is facing.  Suffice to mention the fact that her response has hitherto been reassuring.  In parallel with this the BPC CEO is also in continual communication with the South African counterpart and their interactions have hitherto been positive

 

5.4               Madam Speaker, I am also in continual communication with the Chief Executive of both CNEEC, the contractor, and Fichtner, the Owners Engineer.  As a matter of fact I did meet both of them on 6th December 2012, at which I expressed our greatest concern on failure to deliver the plant in time. 

 

5.5              Madam Speaker, my focus is to bring our power station into service as soon as possible.  It is not my intention to expend a lot of energy trying to find as who is to blame for the inordinate delay in bringing the full power plant into service, which is now targeted for July 2013.  A time will come as it must come to review what we might have done better.

 

5.6              Madam Speaker as President John F Kennedy once said “success has a hundred fathers and failure is an orphan”.  Morupule B will be a success and it will have a hundred fathers.

 

 

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