21 October 2008
Eskom has pre-qualified 27 national and international developers as part of its bid to secure additional power from private companies under its independent power producer programme.
In September 2007, the South African Cabined designated Eskom as the sole buyer of power from independent power producers, and as such the successful bidders will have to sign long-term power purchase agreements with the state-owned utility.
“Power plants developed under this programme will be located at various sites within South Africa and development will be on a build-own-operate basis with the contract estimated to last for 25 years,” Eskom said in a statement this week.
“Under the programme, Eskom’s total requirement ranges from 2 100 megawatts to approximately 4 500 megawatts, with a minimum plant capacity of 200 megawatts.”
Delivery between 2012 and 2017
The 27 pre-qualified companies will be issued with requests for proposals at the end of November, with final bids to close in May 2009. Deals will be concluded in the first quarter of 2010 and delivery of power to South Africa’s grid will be within the 2012-2017 timeframe.
“Most of the applicants are international companies with black economic empowerment partners,” Eskom spokesperson Andrew Etzinger told Sake 24 this week.
“The process is taking so long because the independent producers now need to conclude a comprehensive negotiation process with their shareholders, funders and suppliers, as well as compete for power-purchasing contracts with Eskom. This is an extremely complex and time-consuming process,” he said.
As is customary for base load independent power producers, the power purchase agreement will be structured on an availability basis. Under this structure Eskom, as off-taker, will pay capacity charges based on the availability of the plant.
“The successful independent power producers will also be required to enter into an equivalent term agreement with a fuel supplier to procure and secure fuel supply,” Eskom said.
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