Plan to turn gas to power will cost R50 billion

05 October 2016 - 08:38 By Bloomberg

South Africa will invest R50-billion at the ports of Richards Bay and Coega to build infrastructure for a gas-to-power programme aimed at easing the country's dependence on coal. A plant at Richards Bay will generate 2000 megawatts of electricity from liquefied natural gas imports, with another 1000MW at the Coega industrial development zone, the Department of Energy said this week.The government will seek bidders to manage the project, underpinned by a power-purchase agreement between the winning applicant and Eskom.The programme, which coincides with low LNG prices, will create wider opportunities for the chemical industry and domestic applications, Trade and Industry Minister Rob Davies told investors.Apart from the 3000MW generated at the ports, another 600MW will come from the appointment of a strategic partner for a gas-fired plant and a further 126MW is allocated to domestic gas.Richards Bay initially will require one million tons a year of LNG and Coega 600,000 tons a year, Karen Breytenbach, head of Independent Power Producers Procurement Programme Office, said.The ports will each require R25- billion in infrastructure, she said. The programme is looking to hedge the LNG, which is priced in dollars.Demand for LNG in the country could increase to more than 10 million tons a year after a decade, according to the department."The programme is designed to ensure that the LNG import and regasification facilities are complementary to the development of indigenous gas and/or development of a regional gas pipeline network," the department said.South Africa's existing pipeline infrastructure is limited, with Sasol using a link to import gas from Mozambique to Gauteng. Another line pipes gas to the steel industry and to Richards Bay and Durban. ..

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