Eskom: Medupi Kusile Cost Omissions Evaded Amid Scrutiny

• Eskom's September 10, 2026, media statement reported Medupi's approved construction budget at R145 billion and Kusile's at R160.5 billion, while criticizing higher media figures.
• EE Business Intelligence requested clarification on September 15 regarding the inclusion of direct capital and consequential costs, but Eskom declined to provide further details.
• Eskom's 2016 integrated report revealed that Medupi's R145 billion business case excluded R43.7 billion in capitalised borrowing costs, with Kusile's R161.4 billion business case similarly omitting these costs.
• Significant additional costs, including major water augmentation infrastructure for Medupi and over R13 billion for Medupi-related transmission works, were not included in the stated power station budgets.
• Eskom's Transmission Development Plan also identified R2.8 billion for the first phase of Kusile integration, with a warning that costs beyond the planning period were excluded.

Eskom's presentation of these narrowly defined approved construction budgets has been criticized for omitting substantial capital and consequential cost items.

Eskom has faced scrutiny over its financial reporting practices concerning the Medupi and Kusile power station projects, with critics alleging a materially incomplete and misleading picture of their true costs. In a media statement issued on September 10, 2026, Eskom asserted that Kusile's "approved construction budget" remained at R160.5 billion, with R155.5 billion already spent. Similarly, Medupi's approved construction budget was stated as R145 billion, with R131.1 billion expended. This statement also took aim at media outlets, specifically Daily Investor and MyBroadband, for publishing significantly higher cost figures, reporting R233.4 billion for Kusile and R176 billion for Medupi.

However, the utility's presentation of these narrowly defined approved construction budgets has been criticized for omitting substantial capital and consequential cost items. This approach, according to observers, fails to address the full financial burden of these mega-projects. The discrepancy prompted EE Business Intelligence to seek clarification on September 15, requesting whether Eskom's reported figures encompassed all direct capital costs incurred or still to be incurred, as well as direct consequential costs. They also asked for rough cost estimates for any items not included within the stated R160.5 billion and R145 billion budgets for Kusile and Medupi, respectively.

Eskom's response to these detailed inquiries was notably evasive. Its Media Desk stated that the September 10, 2026, media statement itself "constitutes Eskom’s response." When directly pressed on whether this indicated a refusal to provide the requested clarifications, Eskom offered no further communication. This deemed refusal has been highlighted as particularly telling, especially given Eskom's public admonitions to journalists regarding the importance of "truthful, fair and responsible journalism.

A significant omission that is beyond dispute involves capitalised borrowing costs. Eskom's own integrated report from 2016 revealed that Medupi's R145 billion P80 business case explicitly excluded R43.7 billion in capitalised borrowing costs. The same report indicated that Kusile's R161.4 billion P80 business case similarly did not account for capitalised borrowing costs. The financial impact of this exclusion has only intensified with project delays; Medupi's Unit 1 achieved commercial operation in 2021, while Kusile's Unit 6 reached this milestone in 2025, years after initial projections. Interest accrued during construction is a cost that escalates substantially when large-scale projects experience prolonged delays.

The true cost of the Medupi and Kusile projects extends far beyond the power station structures themselves, encompassing critical supporting infrastructure. Medupi, situated in the water-scarce region of Lephalale, necessitated major water augmentation infrastructure. Furthermore, additional water infrastructure is still required for its Flue Gas Desulphurisation (FGD) retrofit, with Eskom's current plans identifying the Mokolo-Crocodile Water Augmentation Project Phase 2A as essential for Medupi FGD.

Both power stations also demanded extensive transmission integration works to connect them to the national grid, designed to evacuate approximately 4200 MW from each facility. Eskom's historical Transmission Development Plan separately detailed Medupi-related generation-integration schemes, which included over R13 billion in planned transmission works across multiple phases. It also identified R2.8 billion for the initial phase of Kusile integration, explicitly cautioning that costs extending beyond the planning period were not included. These are not trivial capital costs, and their allocation—whether to Generation, Transmission, or another state entity—does not diminish their economic reality. For Eskom to accurately address media claims about the total cost of Medupi and Kusile, it must transparently disclose the precise boundaries of its "approved power station construction budget."

Lawyers and compliance officers advising on public procurement, infrastructure projects, or investments involving state-owned entities like Eskom should note the critical issues of financial transparency and complete cost disclosure. This article highlights the need for rigorous due diligence to uncover all direct and consequential costs, especially when assessing project viability or potential liabilities, given Eskom's refusal to clarify its budget figures.

Source: Original reporting via EE Business Intelligence