27 August 2007
The Department of Minerals and Energy (DME) is delighted to announce that
the process to introduce private sector peaking power generation to South
Africa has reached an important and decisive milestone.
The DME has concluded the Bid evaluation for the tender DME 507/1:
Introducing IPP Peaking Power Generation capacity in South Africa, which
comprises the development of two power plants with a combined generating
capacity of over 1 000 MW, to be located near Port Elizabeth and Durban.
The DME is pleased to announce that the AES Consortium, led by AES Pacific
Ocean Holdings and with local partners Tiso Energy (Pty) Ltd, Mbane Power (Pty)
Ltd and Kurisani Youth Development Trust, has been selected as the Preferred
Bidder for developing the two power plants.
The Preferred Bidder will finance, design, construct, own, operate and
maintain the two new power plants, which are expected to be fully operational
before the end of 2009. Eskom will purchase the electricity from the power
plants over a period of 15 years subject to the developer meeting specified
performance requirements. The Port Elizabeth Facility will have a rated
capacity of about 330 MW while the Durban Facility will have a rated capacity
of about 750 MW. The two power plants are expected to enter commercial
operation towards the end of 2009.
The power plants will contribute to meeting the country's security of supply
challenges and is an integral part of the National Integrated Resource Plan
developed by the National Energy Regulator (NERSA).
The Project was initiated in response to the cabinet decision to introduce
private sector participants, and thus competition, to the generation segment of
the electricity supply industry. In developing the framework for this
pioneering project, the DME has worked closely with various public sector
bodies including the Department of Public Enterprises, National Treasury, the
Department of Trade and Industry, NERSA, Eskom, the Development Bank of
Southern Africa and local and provincial authorities. The DME would like to
take this opportunity to thank these bodies for the assistance provided on the
project to date and we look forward to continuing to work with them on the
remainder of the project.
The appointment of the AES Consortium is subject to it submitting further
documentation to the DME as part of the prescribed process and then to execute
the suite of agreements with parties such the DME, Eskom, lending banks, fuel
suppliers, engineering contractors and equipment manufacturers by the end of
November 2007, after which construction of the facilities will commence. Taken
together, the two power plants represent an investment during the construction
phase of over R5 billion, a significant portion of which will constitute
foreign direct investment.
An important part of the development package is the opportunity created for
local shareholding targeted specifically at Black Economic Empowerment (BEE).
The DME has placed minimum requirements for BEE participation in respect of BEE
shareholding in the Project Company (minimum. 33 percent), involvement of Black
people in the management of the Project Company (minimum. 33 percent) , BEE
Content in the construction contracts (minimum score of 0.6), BEE participation
in the operation and maintenance and skills development and training. A minimum
of 10 percent of the project company is to be owned by Broad-Based BEE entities
with benefits targeted at rural women, previously disadvantaged youth and the
disabled. Furthermore, minimum requirements have been prescribed by the DME in
respect of employment of previously disadvantaged people from within the local
communities where the power will be located.
The DME is pleased to state that the preferred bidder has met and exceeded
all the BEE requirement prescribed by the DME. In addition, the AES Consortium
has committed to corporate social investment schemes to be managed by the
Kurisani Trust. Further details will be provided by the DME at a later
stage.
We would like to take this opportunity to congratulate the AES Consortium
for its success in being selected as the preferred bidder. We look forward to
working with them on the next phase of this important Project.
Further announcements will be made as the Project develops.
Questions and answers
Q: What was the process used to select the Preferred Bidder and how was it
managed?
A: The DME devised and developed a process, using international best
practice, modified to incorporate necessary local requirements. This included
an initial invitation to a wide audience to express interest in developing the
project. This was followed by a "Request for Qualification" assessment that
screened more than 11 parties. This was based on detailed technical, financial
and commercial requirements. Eventually fives consortia were selected, four of
whom pre-qualified for the Avon site and five for the Port Elizabeth site.
Extensive clarifications followed and a rigorous suite of project agreements
and requirements were issued in April. Two bids were received for each site
from two consortia. The bids were examined in detail to determine the extent to
which they met the DME requirements. This then led to a commercial and pricing
analysis culminating in the selection of the AES consortium.
The DME's work in the evaluation was supported by a multi-disciplinary team
of external specialist advisers.
Q. Who were the other Bidders and what is the status of their bids? Does the
DME have a Reserve Bidder?
A. The other bidder who submitted bids for the project was Suez-Inkanyezi
who were unsuccessful. The DME would like to take this opportunity to thank the
Suez-Inkanyezi consortium for submitting their bids. The details of their bid
and the status of their Bid with respect to the reserve bidder is confidential
and commercially sensitive and may only be disclosed at a later stage if deemed
appropriate by the DME.
Q. How have the sites been selected and have the necessary environmental
approvals been provided?
A. The sites were selected by a careful and integrated process involving the
stakeholders. The formal Environmental Impact Assessment process has been
underway for some time and the consortium will now take over the role of the
applicant in terms of that process.
Q. What is the process going forward?
*Announcement of Preferred Bidder, 24 Aug 2007
*Authority decision on EIA Records of Decision mid Sept 2007
*Deadline for submission of preferred bidder Bond, 14 Sept 2007
*Deadline for preferred bidder to establish project company, 14 Sept 2007
*Effective Date (Signing of all agreements), 1 Dec 2007
*Scheduled Commercial, Operation Date, Dec 2009
The Department of Minerals and Energy invites the media to the briefing
session on the release of the draft Nuclear Policy and Strategy for public
comments.
This document is aimed at clarifying Government's vision for nuclear energy,
and it will also serve as a framework document to guide South African nuclear
energy matters.
Enquiries:
Ms Bontle Mafuna
Chief Director Communication
Tel: 012 317 8086
Fax: 012 322 4954
Cell: 082 773 2388
E-mail: Bontle.mafuna@dme.gov.za
Issued By: Department of Minerals and Energy
27 August 2007
Source: Department of Minerals and Energy (http://www.dme.gov.za)
