S. Africa Selects Bidders for $2.9 Billion Coal-Power Plants

  • Plants will add 863.3 megawatts of power to national grid
  • Investors commit debt, equity funding to establish plants

South Africa’s government named the Khanyisa and Thabametsi groups as the preferred bidders to build two coal-fired power plants that will add 863.3 megawatts of electricity to the national grid.

A total of 40.1 billion rand ($2.9 billion) of debt and equity funding has been committed to building the plants, which have backing from Korean, Japanese and Saudi Arabian investors, Energy Minister Tina Joemat-Pettersson told reporters in Cape Town on Monday. The Development Bank of South Africa, the Industrial Development Corp. and the Public Investment Corp, as well as several private lenders including Standard Bank Group Ltd. and Nedbank Group Ltd., will also provide funding, she said.

The government has pushed to diversify its sources of electricity as state-owned Eskom Holdings SOC Ltd., which provides about 90 percent of the nation’s power, had to ration supply after decades of underinvestment in aging plants and delays in the startup of new ones. Businesses and consumers endured almost-daily scheduled power cuts in the first half of last year.

“Despite the significant diversification of our electricity mix, investment in base-load capacity remains a necessity, requiring the addition of 16,383 megawatts of coal within our current planning horizon to 2030,” Joemat-Pettersson said. “These two projects will add much-needed capacity to our national grid.”

Coal Reliance

About 77 percent of electricity in Africa’s most-industrialized economy in generated from coal, according to the minister. Eskom is spending about 306 billion rand to build two coal-fired plants with a combined capacity of almost 9,600 megawatts. In 2012, the government announced that independent producers will be contracted to build coal-fired plants to supply a further 2,500 megawatts.

Situated in the eastern Mpumalanga province, the Khanyisa project will use discarded coal supplied by Anglo American Plc’s coal unit and is expected to begin operating in December 2020. Its owners include Saudi Arabia’s ACWA Power International.

The Thabametsi plant, whose shareholders include Japan’s Marubeni Corp, Korea Power Electric Corp, Royal Bafokeng Holdings (Pty) Ltd., KDI Holdings (Pty) Ltd., and the PIC, will be situated near a new mine to be built in the northern Limpopo province and is scheduled to open in March 2021.

Updates of the country’s overarching energy strategies, known as the Integrated Resources Plan and the Integrated Energy Plan, will be presented to the cabinet this week and released for public comment next week, Joemat-Pettersson said. She reaffirmed the government’s commitment to securing additional power from independent producers, despite objections from Eskom that it could be financially disadvantaged.

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