South Africa Sees Wider Benefits From Gas-to-Power Purchases

  • Invitations to bid in program may be issued as early as April
  • South Africa looking resolve currency issue in procurement

South Africa plans to invite private companies to bid on supplying 3,126 megawatts of gas-fired power as early as April in an initiative intended to give other industries access to the fuel.

The program should also provide infrastructure to transport domestic supplies of gas, Karen Breytenbach, head of the Independent Power Producer office, established by the government to procure energy from private sources, said in an interview.

“We’re going to have to work very closely with everybody so the gas-to-power is only the anchor,” she said. “We hope there will be more gas so that we can then get industries going and distribute the gas in the country.”

Breytenbach said the IPP will seek “bundled" bids to import liquefied natural gas that will be converted back to gas before being used to generate power. The procurement of electricity is intended to supplement capacity at Eskom Holdings SOC Ltd., the state-owned utility that struggled last year to meet demand in Africa’s most-industrialized economy.

The IPP office is working with the Finance Ministry and South African Reserve Bank to find a way to bridge the gap between LNG purchased in dollars and the rand price of electricity to “protect the consumer,” Breytenbach said. The South African currency has dropped 26 percent against the dollar in the past 12 months.

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