BuaNews (Tshwane)
Thapelo Sakoana
27 August 2007
Pretoria — Minerals and Energy Minister Buyelwa Sonjica has announced the AES Consortium as the preferred bidder to build two new power plants in the country.
The consortium is led by AES Pacific Oceans Holdings as well as local partners Tiso Energy (Pty) Ltd, Mbane Power (Pty) Ltd and Kurisani Youth Development Trust.
Addressing the media on Monday, the minister said the two plants - to be located in the Eastern Cape and KwaZulu-Natal - would have a combined power generating capacity of over 1000 mega watts.
"The preferred bidder will finance, design, construct, own, operate and maintain the two new power plants, which are expected to be fully operational before the end of 2009," said the minister.
The two stations would represent an investment of over R5 billion during the construction phase, with a significant portion of this constituting foreign direct investment, she added.
The introduction of an independent power producer (IPP) means that Eskom will purchase the electricity from the power plants over a period of 15 years, subject to the developer meeting performance requirements.
In this regard, the Minister Sonjica added: "We are looking at opening up 30 percent of generation from the private sector while 70 percent will still be with Eskom".
The Eastern Cape facility would be constructed in the Coega Industrial Development Zone near Port Elizabeth, with a rated capacity of about 330 mega watts.
In KwaZulu-Natal, the power plant would be at the Avon sub-station on the north coast.
The stations are expected to enter commercial operation towards the end of 2009.
"The power plants will contribute to meeting the country's security of supply challenges and is an integral part of the National Integrated Resource Plan developed by the National Energy Regulator [NERSA]," said Ms Sonjica.
The IPP project was initiated following Cabinet's decision to introduce private sector participants and competition to the generation segment of the electricity supply industry.
Ms Sonjica said this project would create an opportunity for local shareholding targeted at Black Economic Empowerment (BEE).
"The Department of Minerals and Energy has placed minimum requirements for BEE participation in respect of BEE shareholding in the project company [minimum of 33 percent], the involvement of black people in the management of project company [minimum of 33 percent]," she said.
The minister said there would also be BEE participation in areas of operation, maintenance as well as skills development and training.
A minimum of 10 percent of the project company would be owned by broad-based BEE entities with benefits targeted at rural women, previously disadvantaged youth and the disabled.
At least 6000 temporary jobs will be created during the construction phase of the project, set to start at the end of this year.
The minister said the project would also create 200 permanent jobs.
In developing the framework for this pioneering project, the department worked with various organisations including the Department of Public Enterprises, the National Treasury, the Department of Trade and Industry, NERSA, Eskom, the Development Bank of Southern Africa and various local authorities.
In a move to boost the country's electricity generation capacity, Eskom was granted a license in May to build the first new coal-fired Power Station in more than 20 years by NERSA.
Announcing this breakthrough, NERSA's Chief Executive Officer Smunda Mokoena said the first unit was planned to be commissioned by early 2011, with the last unit scheduled for commissioning by January 2015.
"The Medupi Power Station units are scheduled to be commissioned at nine-monthly intervals - in line with international practice," said Mr Mokoena.
Formerly known as Project Alpha and Charlie, the power station has been named Medupi.
Mr Mokoena explained that the station was a green-fields, coal fired power plant project in Lephalale comprising six units and rated in total at 4500 MW installed capacity.
This project, he said, would include supercritical boilers, which are able to operate at higher temperatures and pressures than older generation boilers and operate with greater efficiency.
Medupi will also use direct dry-cooling, which will be Eskom's fourth dry-cooled base-load station after the Kendal, Majuba and Matimba Power Stations.
The boiler and turbine contracts for Medupi are set to become two of the largest contracts that Eskom has ever signed in its 83 year history.
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