Tongaat Pursues Power-Generation Plan to Feed South African Grid

Tongaat Hulett Ltd. (TON), a South African sugar producer, is pressing ahead with plans to expand electricity generation to feed the national grid, even as it awaits a change to government regulatory policy.

Tongaat Hulett, which already produces enough power at its sugar mills for its own use, plans to expand generation capacity in expectation of a government go-ahead next year, Nico Kruger, the company’s head of renewable energy and expansion projects, said yesterday in Durban.

South Africa’s government yesterday agreed with unions and business organizations to expand investments in industries that use and promote renewable energy. By increasing power generation from sugar-cane byproducts, companies such as Tongaat Hulett can produce electricity for the grid without adding to polluting carbon emissions.

The government, which has committed to buying 3,725 megawatts of renewable energy from independent producers by 2016, issued proposals this year calling for partners to build wind farms and solar parks. The plans excluded biomass power generation. Tongaat Hulett is expecting its inclusion next year.

“The message coming from government is that we must be patient, they will be getting round to us,” Kruger said in an interview. “We are possibly expecting some finality between March and June next year, but in the meantime we have to do a lot of work to get ourselves ready.”

The Tongaat-based company is working on environmental impact assessments and preparing “a lot of work on engineering” in advance of an application to expand power generation, Kruger said.

A typical sugar mill generates about 13 megawatts, enough to meet its own use, and has the potential to generate about 88 megawatts, according to a company statement. The country’s sugar industry has the potential to generate 700 megawatts to 900 megawatts, Tongaat said. Power can be generated for eight months of the year, including during the peak winter-demand season.

Tongaat is South Africa’s second-biggest sugar producer by market value, after Illovo Sugar Ltd. (ILV)

To contact the reporter on this story: Niki Moore in Durban, via the Johannesburg bureau, at vwessels@bloomberg.net

To contact the editor responsible for this story: Antony Sguazzin at asguazzin@bloomberg.net

Press spacebar to pause and continue. Press esc to stop.

Bloomberg reserves the right to remove comments but is under no obligation to do so, or to explain individual moderation decisions.

Please enable JavaScript to view the comments powered by Disqus.