The DME issued a press release yesterday outlining its new-generation capacity plans and it is anticipated that a formal announcement could be made by Minister Phumzile Mlambo-Ngcuka in the next couple of weeks. This announcement would signal the start of a competitive-tendering process, which is designed to culminate in the construction of new privately-owned power plants by 2008.
According to the National Integrated Resource Plan recently published by the National Electricity Regulator, there is a need for over 2 500 MW of new peaking capacity between 2006 and 2010.
Eskom will be responsible for addressing the supply constraints up to the end of 2008, while the DME will ensure that an additional 1 000 MW of peaking power plants, in the form of open-cycle gas turbines, will be introduced by the end of 2008.
It is expected that the additional 1 000 MW will comprise one or two power plants and will be offered by the DME through a competitive tender process.
The DME is reportedly in the final phase of a feasibility study, carried out in accordance with public-private-partnership guidelines, to be submitted to the National Treasury for formal approval to proceed with the procurement phase of the tender.
The expression of interest will be the beginning of the tendering process.
The procurement documentation would first invite independent power producers (IPPs) to prequalify and then to bid for exclusive rights to build, own and operate the new plants, which would be expected to be fully operational by the end of 2008.
As part of its tendering process, the DME will be inviting interested parties to electronically register an expression of interest in the projects.
The department said that registration will enable a two-way exchange of preliminary information, which is best for the formal tendering process.
The invitation will be aimed at IPP investors including international, local and black economic empowerment investors, lenders, turnkey contractors, fuel suppliers, insurers and operators.
This process comes on the heels of last month's announcement by Public Enterprises Minister Alec Erwin that about R107-billion will be needed between 2005 and 2009 to meet South Africa's growing energy demands.
Cabinet has endorsed the plan, which calls on State-owned Eskom to provide about 70% of that requirement.
This will mean an investment by Eskom of some R84-billion over the next five years.
The balance of R23-billion is being reserved for the possible IPP entrants, which the DME is hoping to encourage through its tendering process.
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