Proposal hitches stall power unit sale
Utility criticised for hindering $2.5bn investment, jobs Bidders blamed for proposing additional conditions
October 8, 2009
By SLINDILE KHANYILE
The sale of Ngagane power station in KwaZulu-Natal was stalled because some of the short-listed parties included proposals that were not part of the original request for proposals, Eskom said yesterday.
Responding to criticism that it was jeopardising a $2.5 billion (R18.6bn) investment and creation of thousands of jobs, Eskom said concluding the sale of the dormant plant depended on a resolution regarding the inclusion of conditions that were initially not requested.
"Responding to these issues has taken time," said an Eskom spokesperson.
The state-owned enterprise put out a tender last July to sell the power station, which was shut down 18 years ago. By the end of last year, Southern African Power Consortium (SAPC) and EB Steam had been short-listed as preferred bidders and a final decision was expected to be made between March and April.
Yesterday, Bill Cochrane, the managing director at EB Steam, said Eskom might have to revisit all the proposals to buy and rebuild the Ngagane power unit at Amajuba Municipality before making a decision on which of the two short-listed preferred bidders to choose.
This was according to the last letter that Eskom sent to EB Steam. Cochrane said the correspondence informed them the decision was a complex one around the pricing deals versus independent power producers.
EB Steam said it proposed to invest $600 million to buy and rebuild the plant. It wanted to keep the capacity at the current 500 megawatts and to use the electricity to run its high-voltage boilers.
The company is owned by the Cochrane family, Investec and Shisa Steam, which is an empowerment partner.
"Eskom would get relief from supplying us," said Cochrane. He added there were plans to partly use the plant for renewable energy and create 300 permanent jobs and thousands of construction jobs.
On the other hand, SAPC wants to spend $2.5bn to rebuild the power station and to triple its size to 1 500MW, which would all be sold back to Eskom. There would be 400 to 500 permanent employment opportunities over and above the thousands of construction jobs.
On Tuesday, SAPC said it had not spoken to the power utility at all this year and felt the matter was not being treated with the urgency it deserved. The consortium said the investment, a bulk of which would come from global financial institutions, was in jeopardy.
But yesterday Eskom denied this, saying it had been in touch with SAPC through face-to-face meetings and phone conversations. It sent a letter to SAPC in July and awaited further responses from the consortium.
Eskom said no commitments were made regarding any of the proposals presented that highlighted different possible solutions for Ngagane.
Department of Energy spokesman Bheki Khumalo said the department was not aware of a letter that SAPC said it had sent asking about Ngagane.
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