US firm to build new power plants
28 August 2007
A consortium led by US power producer AES has been selected as the preferred bidder to build, own and operate two new power plants in South Africa, representing an investment of over R5-billion during the construction phase, a significant portion of which will constitute foreign direct investment in the country.
In what has been seen as a decisive step towards involving the private sector in South Africa's energy arena, Minerals and Energy Minister Buyelwa Sonjica announced on Monday that the AES consortium was the preferred bidder to build two open cycle gas turbine peaking power plants, a 760MW plant in Durban and a 342MW plant in Port Elizabeth.
The plants will contribute to state electricity company Eskom's efforts to improve the reserve margin of SA's power system, which has fallen in recent years due to strong economic growth in the country.
To address the need for new generation capacity, the government has set a policy requiring that the private sector build 30% of the country's new generating power through independent power plants.
According to the Department of Minerals and Energy, the new peaking power generation projects in Durban and Port Elizabeth represent the first of these planned investments by the private sector, in addition to Eskom's plans to invest R150-billion (US$21-billion) over the next five years.
"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," Sonjica told journalists in Pretoria.
At least 200 permanent and 6 000 temporary jobs are expected to be created during construction of the plants, which is set to begin at the end of the year, once the contract with the consortium has been finalised.
The consortium includes three local black economic empowerment (BEE) partners: Tiso Energy, Mbane Power, and Kurisani Youth Development Trust, the investment arm of HIV/Aids awareness programme loveLife.
"This is a great success for AES and our BEE partners in South Africa that will help reduce the country's power supply challenge and support economic growth, while also promoting skills and knowledge transfer," AES president of Europe and Africa John McLaren said in a statement.
The Eastern Cape plant will be built in the Coega Industrial Development Zone near Port Elizabeth, while the KwaZulu-Natal plant will be built at the Avon sub-station on the coast north of Durban.
SouthAfrica.info reporter and BuaNews