Friday, July 30, 2021

Botswana to lose billions in Morupule B sale

Botswana is expected to lose billions of Pula in the planned sale of Morupule B power plant to China National Electric Equipment Corporation (CNEEC), the Chinese contractor that was commissioned to build the plant under controversial circumstances.

The plant which has already accumulated cost over runs in excess of P8 billion was initially budgeted for USD 905.4million (P 9.8 billion at current exchange rate) but costs had ballooned to USD 1.660 (P18 billion) in 2014 when the Chinese contractor was kicked out of the site. The current figure is believed to be much higher

Documents passed to the Sunday Standard suggest that Morupule B’s current value may be less than half the P18 billion already spent on the plant. The plant may actually end up being sold to CNEEC for less than the initial budgeted cost of P9.8 billion because its lifespan has been badly compromised even before completion. And this is the best case scenario.

The worst case scenario is that Morupule B has suffered many operation and maintenance failures that it has used up its insurance spares and may actually have to close down should one of the vital spare parts be needed.

A report compiled by the Chinese contractor between January and March 2014, before they left the site suggests that everything that can possibly go wrong with the plant is actually going wrong. The report reveals how Morupule B poor operating and maintenance (O&M) practice compromised asset management, cost government a lot of money and reduced the lifespan of the plant.

The contractor warned that although the plant operators were not familiar with the system, they ignored the manufacturer’s instructions on numerous occasions, threw out the operating manual and chose to fly blind.

Between January 1 and January 28th 2014 the Morupule B team had to shut down and restart unit 40 of the plant ten times. This is by far in excess of the statutory requirement of once every two years. The shutdowns and restarts involve pressure tests beyond the ordinary operating pressure of the plant and speed up the wear, tear and fatigue of the plant. The Chinese contractor warned that “this kind of frequent shutdown and restart shall adversely impact the equipment life cycle especially for the heating surface and pressure parts.”

During the three months covered in the report, the Chinese contractor pointed out 25 operating and maintenance breaches which it warned would reduce the lifespan of the plant.

The Chinese contractor has however absolved itself from plant’s operating and maintenance failures, claiming that during January 2014, they were not allowed to check the running status of the units although they issued three warning letters about the clutters coming from unit 10 and unit 40.

The valve boilers clutter indicated that the system was operating above the certified pressure. The Contractor warned that the clutter may have been a result of the frequent lifting of the valves suggesting “a lot of overpressure phenomenon.” They pointed out that this would reduce the lifespan of the safety valves “which are critical to the plant and very expensive” to replace. They further warned that “the overpressure phenomenon shall lead to the leak and also reduce the life cycle of pressure parts” of the plant.

The report further reveals how Morupule B staff ignored the equipment operating manual. The boiler outlet temperature in one of the air duct burners was allowed to rise from 558 degrees Celsius to 1151 degrees Celsius far in excess of the protection value of the outlets temperature which is 860 degrees Celsius, resulting in an explosion and fire outbreak. The Shift staff however did not notice the fire for a long time. The refractory, the flexible junction and the cables were burnt “which shall cost a lot for the BPC to fix”, stated the report.

It has further emerged that two boiler FBHE fluidizing fans were run at a current beyond that stipulated in the equipment manual. The fans were run at a current of 134 Amps while the stipulated current is 128 Amps. The contractor warned that this would destroy the motor and reduce the plant lifespan.

The contractor also warned that the outlet temperature in one of the air duct burners was allowed to reach a temperature of 1203 Degrees Celsius far in excess of the outlet temperature protection value of 860 Degrees Celsius.

The boiler reheat temperature was allowed to reach 574 Degree Celsius at a pressure of 154 bar while the setting value of the reheat steam is supposed to be only 540 Degrees Celsius at a pressure of 138 bar. The contractor warned that the overheating would lead to deformation and leakage of the tubes. In addition this will adversely affect the equipment lifespan especially the heating surface and the pressure parts. Indications are that the overheating went on for a long time as it was noted during the inspection on 27thand 28th of January and again during the March inspection for both unit 10 and unit 40.

The report further revealed how Morupule B staff pushed the voltage of the plant boards beyond the limit. “The voltage of boards for 6.6kV and 400v” were allowed to reach 7.00kV and 430V.  The contractor warned that the excess voltage would “destroy the electrical equipment and reduce the life cycle” of the plant.

Sunday Standard investigations have turned up further information that because of the frequent operating and maintenance failures, the plant has already used up its insurance spares increasing Morupule B’s risk profile.

An insurance spare is a spare part that the company holds in its spare parts inventory that they would not expect to use in the normal life of the plant and equipment but if not available when needed would result in significant losses or even collapse of the company. Insurance spares are more like the insurance you may buy to cover your house or car. You don’t want to claim on the insurance but you don’t want to be without it. Insurance spares are the ultimate ‘just in case’ inventory which may result in a collapse of the plant if they are not available when needed.

Morupule A for example still has insurance spares although it has been in operation for many years.

Minerals, Energy and Water Resources Minister, Kitso Mokaila confirmed to the Sunday Standard recently, “yes we are engaging and there are so many options on the table,” he said, adding that selling the power plant to the contractor is one of the options on the table.

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