BUSINESS MAVERICK

Preferred bidders unveiled for 2,000MW of emergency power — with the first flow in August 2022

By Ed Stoddard 18 March 2021

Minerals and Energy Minister Gwede Mantashe. (Photo: Flickr / Africa Oil & Power)

And the preferred are...! Energy Minister Gwede Mantashe has unveiled the winning operators for projects that will plug an additional 2,000MW of sorely needed power into South Africa’s crumbling electricity grid. The first connections to the grid are set for August 2022.

Power, or lack of it, is probably the biggest threat to South Africa’s economy. The Covid-19 pandemic will eventually recede, but load shedding preceded it and will almost certainly outlast it. At last, there is movement on getting additional power plugged into the grid, with Mineral Resources and Energy Minister Gwede Manatshe announcing the preferred bidders for the emergency power procurement programme that was launched in August of 2020.

“The quantity and quality of the bid responses and potential megawatt of contracted capacity allowed for a competitive price evaluation,” said Mantashe.

“All compliant bids were subjected to local and international benchmarking, which is necessary to ensure that we receive value for money as required by the legislation.”

The preferred bidders are: Acwa Power Project DA, Karpowership SA Coega, Karpowership SA Richards Bay, Karpowership SA Saldanha, Mulilo Total Coega, Mulilo Total, Hydra Storage, Oya Energy Hybrid Facility and Umoyilanga Energy.

In February of 2020, Karpowership told the Reuters news agency that its ships, which anchor off-shore, are capable of providing a range of power options from 30 megawatts to about 600MW. Acwa is a Saudi company.

“These eight projects will inject a total private sector investment amount of R45-billion to the South African economy, with an average local content of 50% during the construction period. South African entity participation from these projects is 51%, with black ownership at 41%,” Mantashe said, noting that this should ease concerns about white monopoly capital.

About 3,800 job opportunities are expected to be created during the 18-month construction period and a further 13,500 during the 20-year Purchase Power Agreement Term.

“The solutions provided by these preferred bidders are from a combination of a range of technologies that include solar PV, wind, liquified natural gas and battery storage,” Mantashe said in his prepared remarks.

“The preferred bidders are required to reach financial close by no later than the end of July 2021. Due to the urgency to bring power online, this date is not negotiable,” he pointedly said. His use of the word ‘urgency’ will be welcomed.

But these things do take time and cannot be built overnight. 

“It is envisaged that first power from these projects will be connected to the grid from August 2022.”

Mantashe also said the request for proposals for procurement of an additional 2,600MW for private power producers would be launched at midnight on Thursday. That gets the power ball rolling further.

With strict timelines in place, there are measurable targets. Hopefully, these targets can be met and even exceeded, unlike the shambolic roll-out of the Medupi and Kusile power plants.

In the meantime, load shedding will continue and will prevent the economy from reaching its full potential. DM/BM

Gallery

Comments - share your knowledge and experience

Please note you must be a Maverick Insider to comment. Sign up here or sign in if you are already an Insider.

Everybody has an opinion but not everyone has the knowledge and the experience to contribute meaningfully to a discussion. That’s what we want from our members. Help us learn with your expertise and insights on articles that we publish. We encourage different, respectful viewpoints to further our understanding of the world. View our comments policy here.

All Comments 24

  • “All compliant bids were subjected to local and international benchmarking, which is necessary to ensure that we receive value for money as required by the legislation.”

    And here we go!!!

    Let’s see how this ends…..

  • 9 bidders with Karpowership, a Turkish-based company has posted it was awarded three bids to ease the pressure on Eskom. Does preferred in this report translate to awarded.

    • Correction: Luke Daniel , Business Insider SA Mar 19, 2021, 05:55 AM stated “This comes as a Turkish-based company was awarded three bids to ease the pressure on Eskom.” So is it preferred or awarded.

  • What is wrong with this so called minister, he now comes up with a crazy scheme to generate power from boats but refuses to use the energy from the Independent Power Producers which is available now.
    This creature should be put away.

  • Can we have a follow-up on this story? Comments from the industry heavy weights, Saippa to give more perspective on what we can expect? Influence on energy cost, measures to control pollution in harbours, etc

  • About time too Gwede!! Finally stirring from your slumber! You have done everything to delay and obfuscate this process because of vested anc interests, which means putting party way before country! Nothing but a dinosaur stuck in the communist past where state control/planning rules supreme.

  • I hope all ties to local government officials are investigated first. Any bidder with family ties to any politician should be downrated.

  • “the electricity grid is crumbling”. I had understood that, for now, it is the power stations that are failing. If it is the grid as well these IPP are only a short term stop gap for the generation shortage.
    An assessment of the maintenance deficit on the grid is then also critically needed.

  • Too little too late I’m afraid. Outsourcing to Turkey, pfffft. So much opportunity for job creation in the renewable energy sector. Turkey obviously understands the “African Tender System”

  • No mention of the several thousand MW that could be provided from local mining companies and agri-businesses, much of which could have been switched on well before next August? Did they perhaps not understand the finer points of Mantashe’s tendering process??

  • Karpowership supply is wrong. It will create few local jobs. NOT green energy. Profits go off-shore. Its temporary. Invest in permanent long term green solutions. Rather sponsor solar panels and grid hybrid systems on residential houses and reduce the load on Eskom – a better longer term solution.

  • This is so very disappointing. Even when Mantashe gets it right, he still gets it all wrong. Our current IPPs can up their feed-in quota immediately. Why wait till 2022? Mind-boggling… until Scorpio finds someone driving a new high-end SUV and has to hurriedly go for tea at Nkandla.

  • “…an average local content of 50% during the construction period. South African entity participation from these projects is 51%, with black ownership at 41%.” Therefore we are paying twice as much as necessary.

  • 20 year purchase agreements -understandable for generating tech bolted to the roof/concrete foundations. But ~1200 MW of the 2 GW is slated to come from gas burning generators that can sail off at short notice. Why not shorter term agreements for the power ships?

  • BUSINESS MAVERICK

    Will Adapt IT suitors jump ship following allegations about the CEO?

    By Sasha Planting and Ray Mahlaka

    "I think that if ever a mortal heard the word of God it would be in a garden at the cool of day." ~ F. Frankfort Moore