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Department of Energy peaker projects, South Africa

14th March 2014

  

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Name and Location
Department of Energy (DoE) peaker projects, South Africa.

Client
DoE.

Project Description
The project involves the construction of two greenfield open-cycle gas turbine (OCGT) power plants of 335 MW (Dedisa) and 670 MW (Avon), in the Eastern Cape and KwaZulu-Natal respectively, with a combined capacity of 1 005 MW.

Each facility will also have on-site fuel and water storage for a continuous 45-hours of full-load operations.

Value
The total investment cost for the two plants is about €780-million.

Duration
Commercial operation is expected to start at Dedisa in 2015 and at Avon in 2016.

Latest Developments
The Dedisa and Avon peaking power projects were named the Euromoney Project Finance Magazine’s Africa Power Deal of the Year for 2013 in February this year.

The financing for the independent power project peaking projects was facilitated by coordinating mandated lead arrangers (MLAs) Nedbank, Investec, Absa and the Development Bank of Southern Africa, and MLAs Rand Merchant Bank and Sanlam, who were responsible for negotiating the finance documentation and settling the project documentation.

Nedbank Capital was the largest lender in the consortium having underwritten R2-billion of the projects’ senior debt.

The projects, which are being developed by a consortium led by international energy group GDF Suez, reached financial close in August last year, with construction starting in September.

Key Contracts and Suppliers
GDF SUEZ consortium, comprising GDF SUEZ (38%), Legend Power Solutions, of South Africa (27%), Mitsui & Company, of Japan (25%) and The Peaker Trust, representing black economic-empowerment and community interests, 10% (build, own and operate contract); Ansaldo Energia and Fata (turnkey engineering, procurement and construction) and Merz and McLellan (owner’s engineer).

On Budget and on Time?
The peaker projects have been subjected to several delays, with the DoE having initially selected an AES-led consortium as the preferred bidder, before terminating talks in April 2008. Negotiations were subsequently launched with the GDF SUEZ-led consortium.

The DoE eventually awarded the contract to a consortium comprising GDF SUEZ (38%); Legend Power Solutions, of South Africa (27%), Mitsui, of Japan (25%) and The Peaker Trust, representing black economic-empowerment and community interests (10%).

In June, the consortium signed a 15-year power purchase agreement with Eskom.

Contact Details for Project Information
DoE spokesperson Thandiwe Maimane, tel +27 12 406 7470, fax +27 86 615 6949 or email MediaDesk@energy.gov.za.
GDF Suez, tel +33 1 44 22 66 29 or email ir@gdfsuez.com.
Ansaldo Energia, tel + 39 010 6551 or fax + 39 010 6553411.
Fata, tel +39 011 96681 or fax +39 011 9672 673.
Merz and McLellan, Jo Reeves, cell + 27 76 984 4485

Edited by Creamer Media Reporter

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