Eskom+needs+private+power+station,+Samantha+Enslin-Payne,+B+Report



=**Eskom needs private power station as stopgap**=

**Samantha Enslin-Payne, Business Report, Johannesburg, 18 February 2008**

Durban - Eskom will turn to the private sector to build and operate a base load power station, to plug a gap between the commissioning of two new coal-fired plants and new nuclear capacity.

Brian Dames, the head of generation, primary energy and the new build programme at Eskom, said on Friday: "If you look beyond the coal stations [Medupi and Bravo] we do not have agreement with Nersa (National Energy Regulator of SA) on the new build plans. [But] we have to have another base load station before new nuclear comes on stream."

Eskom's plans to secure private sector participation in a new base load power station is to ensure that in 10 years South Africa is not faced with power shortages again.

The current energy shortage is largely due to the government's delays in giving Eskom the go ahead to invest in new capacity.

Medupi and Bravo, which will each generate 4 800 megawatts, are due to be completed in 2015 and 2016, respectively. The first power from a new nuclear station is due to come on stream from 2017.

But the full nuclear programme, which aims to add 20 000MW to Eskom's capacity, is only due to be completed in 2025 or even later.

Dames said the plan for a power station built and operated by the private sector was a bid by the utility to be proactive.

Asked whether a privately built power station would alleviate some of the pressure Eskom is facing with regard to funding its new build programme, Dames said it would have some balance sheet benefits, but there would still be an underlying credit risk for the utility, as it would sign a power-purchase agreement.

He said: "We have full intent for a private power station. We have no hang-ups with independent power producers."

Nersa's Thembani Bukula, who is responsible for electricity, said that there had been no decision or discussion with Eskom on the timing of new capacity.

Eskom's existing plans mean that the utility is not in a position to raise funds for a third base load coal-fired power station without charging higher tariffs or securing a loan from the government.

In light of this and the fact that the government's policy is that the private sector will contribute 30 percent of new generating capacity, Nersa will promote, rather than retard, any private sector base load station, according to Bukula.

Dames said the details of the new private sector plant, commissioned by Eskom, had not been worked out yet, but it would either be a big base load plant such as Medupi or half the size of one.

As the single buyer of power, Eskom will run the process of requesting and selecting bidders.

The utility aims to begin the process of calling for bids "within the next couple of months".

The minerals and energy department is negotiating with a private sector consortium led by US energy company AES, to build two peaking plants or open-cycle gas turbines with a combined capacity of 1 050MW, to be operating by the end of next year.

But negotiations on financial closure for the deal with AES have dragged on, raising concern that the deal may not materialise.


 * From: http://www.busrep.co.za/index.php?fArticleId=4259797**

552 words