Minerals and Energy Minister Gwede Mantashe on Thursday announced the eight preferred bidders to produce a total of 2 000 megawatts additional energy in the national grid and supplement, on-demand, the electricity that national power utility Eskom produces.
The procurement of 2 000MW under the Risk Mitigation Independent Power Producer Procurement Programme was intended to meet the immediate electricity supply gap. Energy security of supply was the backbone of any economy and it acted as a stimulant and catalyst to economic growth and development, Mantashe said.
He said South Africa had become accustomed to intermittent electricity supply along with the continued rising pricing structure, which “has an adverse impact on the ability of the economic sectors to deliver optimal production, as well as the ability of the citizens to access electricity for household use”.
It is envisaged that the first supply of power from these projects will be connected to the grid from August 2022.
Earlier on Thursday, Eskom announced two hours of rotational power cuts across the country as a result of “high demand or urgent maintenance being performed in certain power stations”.
The eight companies to provide this long term solution are ACWA Power Project DAO, Karpowership SA Coega, Karpowership SA Richards Bay, Karpowership SA Saldanha, Mulilo Total Coega, Mulilo Total Hydra Storage, Oya Energy Hybrid Facility and Umoyilanga Energy.
Mantashe told the media that the eight projects “will inject a total private sector investment amount of R45 billion to the South African economy, with an average local content of 50% during the construction period”.
South African entity participation from these projects is 51% with black ownership at 41%, he said.
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Asked how the average local content of 50% would be achieved when 23 of the bidders had been issued with an exemption to comply with 40% local content stipulation to promote local manufacturing, the department referred questions to the department of trade, industry and competition - which was responsible for granting the exemptions.
The exemption of local content applied where the number of materials or products required could not be wholly sourced from South African-based manufacturers.
City Press had seen a document containing a plan on how one of the preferred bidders, Karpowership, intended to support local economic development in Coega.
The Coega project was envisioned to create direct employment for more than 1 000 people during the construction and more than 30 000 during the operational period.
Noting that South Africa had a current unemployment rate of 43.1%, it was expected that up to 60% of those employed should be black South African citizens.
Opportunities would also be available for the development of marine-based power generation skills, long term transferable skills, empowering local or black workforce and opening access to a new employment sector.
“Karpowership anticipate training more than 4 000 people over the lifetime of the project, providing internationally recognised certification for various levels, skills and functions. Therefore, this will also assist with further increase in local content percentage,” read the document.
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In rand terms, City Press heard that more than R250 million was likely to be committed during the construction phase. To boost the local economy, at least R160 million of the budget was expected to be invested in local products and services.
Up to R6 billion could therefore be spent on local content over the operational period of 20 years.
“The plan is to engage South African sub-contracting entities to perform all Balance of Plant Works and include provisions to manufacture in South Africa. Karpowership entities will procure 100% of goods and services for the duration of its 20-year agreement from South African entities that have a localised footprint in the port of operation.”
These services “include, but are not limited to security services, cleaning services, chandlery - food and beverage, environmental and social monitoring activities and transportation”.
The company said it had an intention to initiate the development and growth of localised small business entities through the manufacture and supply of products such as consumables and spare parts for the Powership where such items are not immediately available locally or where none existed within South Africa.
“We, as Karpowership, envisage that these projections will increase as the maritime, petrochemical and power industries expand in South Africa. Karpowership commits to assisting local companies to develop the technologies required to supply them with these components. Supplier development and enterprise development programmes are vehicles that could be employed to achieve this objective,” the document read.