Five bidders for new power plants

24 August 2005

Five consortia have qualified to bid for the exclusive rights to build, own and operate two new power stations needed to meet South Africa’s growing energy demands.

The new plants, at sites still to be finalised in the Eastern Cape and KwaZulu-Natal, are expected to cost R6-billion to build and to be fully operational by the end of 2008.

The successful consortia were announced by Minerals and Energy deputy director-general Nelisiwe Magubane in Pretoria on Tuesday.

The five successful applicants are AES, comprising black-owned Tiso Energy and Lereko Energy; Inkanyezi, which includes French company Suez Energy and Mvelaphanda Holdings; Tata-J&J Consortium; the Malaysian YTL-led consortium; and the International Power Consortium.

Magubane said that some of the evaluation criteria included experience in the green fields of building power stations, black economic empowerment, the applicant’s reputation in the energy sector, and the ability to raise finance.

Peaking plants
The new generation capacity will comprise two oil-fired, open-cycle gas turbine power stations with a combined capacity of about 1 000 Megawatts, operating as peaking plants – meaning the power stations will operate mainly during peak hours of electricity use.

According to Business Day, the introduction of independent power producers is aimed at bringing competition to power utility Eskom, which currently produces 95% of SA’s electricity, and at further reducing the cost of SA’s electricity, already among the cheapest in the world.

The two privately operated stations, although restricted to selling their power to Eskom, will effectively end the state company’s monopoly.

Magubane said that Eskom would be increasing its generational capacity, and would be involved in 70% of new energy production projects in the country, with independent producers being involved in the remainder.

According to Business Day, Eskom is expected to spend R48-billion in the next five years on building new capacity, with the private sector expected to invest R23-billion.

‘Ambitious’ timetable
Magubane said that while energy shortages in South Africa were only expected around 2010, the recent economic boom had led to increased energy use, prompting the government to revise that timetable.

“An estimated 12 000MW of peak generation capacity will be needed for the next 20 years, excluding the capacity provided by the return to service of a mothballed plant”, Magubane said.

Magubane said prefered bidders would be announced by June 2006, with construction due to start in the first quarter of 2007 and to be completed within 18 months.

Admitting the that the timetable was “ambitious,” Magubane said: “We are not going to compromise on the deadline.” reporter and BuaNews