Power utility Eskom's recent price increases, including the 31% hike announced last month, had changed the Coega Industrial Development Zone's (IDZ's) value proposition, said Coega Development Corporation (CDC) CEO Pepi Silinga on Monday.

He said the IDZ was started with the aim of using South Africa's cheap electricity to attract investors, especially in minerals beneficiation. The proposed multibillion-dollar Alcan aluminium smelter, which had not materialised to date, was the most prominent of these projects.

However, Silinga noted that the Coega IDZ was now a multisector investment zone, and not just an industrial development.

“Some investments, such as business process outsourcing, do not consume as much electricity as the original minerals beneficiation model."

Silinga added that Coega was currently a "power taker", but noted that the CDC was in the process of becoming a power generator through the proposed construction of a combined-cycle gas-turbine power plant, by an independent power producer.

Silinga noted that the prefeasibility study of the project had already been completed, and that government had already approved it. He said that it was now "time for phase two".

CDC business development executive manager Khwezi Tiya told Engineering News Online that the power plant, using liquefied natural gas as a feedstock, would be a 3 200-MW facility, to be located in the IDZ. It was a separate project from the proposed PetroSA power project.

Tiya said the CDC would call for expressions of interest for the project, estimated at $4-billion, within the next two months.

He said that the best-case scenario would see construction start in mid-2012, with the first electricity to be delivered at the end of 2013.

Tiya noted that the power generated by the project would be supplied to the national grid, and not directly to the Coega IDZ, but said the development would still be aided by increasing the general availability of electricity in South Africa.

"With the increases in the electricity prices we have seen, South Africa is still relatively cheap – as we go up, everybody else goes up," Silinga added.

He said the current economic crisis had improved the availability of electricity, but added that this could change "two years down the line" when the crisis eased.

General Motors African Operations vice-president and General Motors South Africa president and MD Steve Koch noted on Monday that increased electricity prices were not an issue for the Port Elizabeth-based vehicle assembler, but that reliability, quality and availability of supply were of more importance.

"We lost a few days of production last year."

He added that he was concerned that local industry would again experience widespread power outages as it did last year, once the economy picked up.

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