Johannesburg, South Africa — ESI-AFRICA.COM — 11 May 2011 – South African national power utility Eskom Holdings says it has suspended construction at its 4,800MW Medupi power plant, which is meant to be filling a looming power crunch, due to protests by contract workers.

Work has also been suspended at Eskom’s other Kusile power plant following protests which occurred at that site last week.

Eskom said last month that power supplies in Africa’s largest economy would be tight for several years due to a lack of capacity, worrying the energy-intensive mining sector, which was forced to shut for five days due to shortages in 2008.
 
The utility said, however, that the temporary construction halt would not delay its plans to bring new power plants on stream.

“The build programme is on track, with the first unit of the new power station scheduled to come on line at the end of 2012,” it said in a statement.

Medupi and Kusile are Eskom’s first two power plants in more than two decades, and are meant to fill a dire supply shortage that threatens economic growth.

“The fear from the investors’ side is that we don’t really know when it will end and what needs to be done to end it,” said Peter Attard Montalto, an emerging markets analyst at Nomura.

Workers are suspected of setting vehicles on fire at the Medupi site, protesting what they said was the hiring of foreign workers as welders, said Johannes Musel, CEO at Hitachi Power Africa, one of the contractors at Medupi. He added that the company would be in talks with unions and other contractors to try to resolve the disputes.

Foreigners make up a maximum 10% of its workers at the site and were hired due to a local skill shortage, he said. The protest at Kusile began in sympathy for workers at one of the firms, which was nearing the end of its contract and demobilising, The protest then turned into a strike over wages.

“Talks began on Monday but it was hard to say how long they would go on,” said Stephen Pell, a spokesman for Kusile Civil Works, which is a joint venture of contracting companies at the plant. A contractors’ management forum was, however, already considering letting the striking workers go.

Eskom said it closed the two sites as a precautionary measure and would reopen them when it felt the safety of its workers was guaranteed.