Pretoria - An agreement between two leading private entities has led to a ground-breaking project that is expected to provide a 107 MW power plant, which will use gas from Mozambique to provide an interim power supply to South Africa and that country.
Aggreko, one of the world's largest power solutions company and South African investment company Shanduka announced on Wednesday that the project - approved by South African energy regulator NERSA and the Departments of Energy and Public Enterprise - will see the power plant come on stream early in the third quarter of this year.
It is expected to complement other alternative energy initiatives South Africa is embarking on, including a 100 MW concentrated solar power plant in Upington in the Northern Cape, as well as a 100 MW wind power project in Sere, outside Cape Town.
The agreements are subject to the parties fulfilling a number of conditions before becoming effective.
The generation capacity of the plant will be split between the two companies - Mozambique's Electricidade de Mozambique, which will utilise 15 MW and South Africa's Eskom, which will utilise 92 MW.
The power plant will be built on the site of Gigawatt Mozambique SA as part of their Concession Agreement at Ressano Garcia, on the Mozambique / South African border.
In a statement, the parties said, Aggreko will be responsible for building gas interconnections, a major substation and 1.5 kilometres of 275 kV transmission line as per the agreements with the Matola Gas Company SA and Gigawatt Mozambique SA.
The total value of the project is likely to be in the region of $250 million over two years, including fuel costs.
"This is thought to be the first project by a private company to supply an interim cross-border power solution to two utilities in southern Africa, and underlines the potential benefits that can accrue to countries sharing resources."
South Africa's national grid has been under severe pressure in recent years, leading to load-shedding in 2008.
Eskom is currently building two major coal-fired power stations, Medupi and Kusile, in Limpopo and Mpumalanga respectively. But until the completion of the stations, South Africa's high energy demands are expected to continue to threaten supply.
It is hoped that with the agreement this week, both South Africa and Mozambique will get much needed additional power, with the project also underlining the importance of the two countries as energy hubs for the entire Southern African region.
According to Aggreko's chief executive, Rupert Soames, the contract was not only important for South Africa and Mozambique but for southern Africa as a whole.
"We also hope this project will be an example for other countries seeking to optimise their resources and manage the supply of regional power."
The companies envisage employment and training of about 100 locals with the procurement process tailored to benefit South African companies.
