An $8.7 billion (R135 billion) power plant in South Africa won\u2019t ever make a profit because of delays, design defects and increasing opposition to coal-fired electricity generation, one of its funders said.<\/p>\n
Cost overruns at the 4,764 megawatt Medupi coal-fired plant, owned by Eskom, along with the even larger Kusile facility are seen as key reasons for the state utility\u2019s R396 billion ($25.5 billion) debt burden.<\/p>\n
The project will not meet anticipated returns over its life and is unlikely to stay open that long as pressure grows to reduce greenhouse gas emissions, said the African Development Bank, which approved a 930 million euro loan ($992 million) loan for its construction in 2009.<\/p>\n
\u201cThe Medupi project as installed will not show a positive return and will deliver internal rates of return below the weighted cost of capital for Eskom,\u201d the AfDB said in a\u00a0completion report<\/a><\/strong>\u00a0posted on its website last month. \u201cThis project will not show a financial benefit over its lifetime.\u201d<\/p>\n Medupi, together with Kusile, was touted as the solution to the intermittent power outages that have plagued South Africa since 2008. Instead it\u2019s become a millstone. An explosion at one of its units last year has temporarily reduced its capacity. Now Eskom is being pushed to accelerate the closure of its coal-fired plants to help the country transition to green energy.<\/p>\n \u201cDue to current perceptions of coal energy this plant is unlikely to reach its original projected 50-year life,\u201d the AfDB said. \u201cChoice of megaprojects with such long lives needs very careful consideration to avoid the challenges now faced by this project in terms of cost and time overruns as well as climate change-related environmental concerns.\u201d<\/p>\n Other funders of the plant include the World Bank. News24 reported on the AfDB\u2019s report earlier.<\/p>\n
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