South Africa May Double Power Buy From Congo Hydro Plant
(Bloomberg) -- South Africa is considering doubling the amount of electricity it plans to buy from a proposed multibillion-dollar hydro power plant in the Democratic Republic of Congo.
Increasing South Africa’s electricity purchases has become a linchpin for the companies seeking to build and operate the 11,000-megawatt facility. Congo in October named Chinese and Spanish groups as co-developers of the plant, which could cost as much as $18 billion including transmission lines.
South Africa committed to purchasing 2,500 megawatts from the dam, known as Inga 3, in a 2013 treaty between the two countries. In December, South African Energy Minister Jeff Radebe notified the Congolese authorities of his government’s willingness to increase the amount it will purchase.
“I wish to indicate South Africa’s interest to procure additional capacity of 2,500 megawatts over and above that which was committed under the treaty,” Radebe said in a Dec. 19 letter to Bruno Kapandji, who heads Congo’s Agency for the Development and Promotion of Grand Inga. The letter, seen by Bloomberg, was verified by the agency.
The plan for South Africa to double future off-take from the dam comes as its state-owned power company, Eskom Holdings SOC Ltd., struggles to emerge from growing debt accrued from building new plants. Demand for electricity has declined as growth in Africa’s most industrialized economy has slowed and some consumers now generate their own electricity.
Eskom said there’s no certainty as to when the dam will be finished and it needs to avoid relying too heavily on external sources, the Johannesburg-based Business Day newspaper reported, citing a spokesman for the utility.
South Africa’s parliamentary energy committee in November cast doubt on the wisdom of relying on the Congolese project. It recommended that alternatives be found to replace the 2,500 megawatts of off-take then contracted “in the event that the Grand Inga project does not come on line in time.”
Spokeswomen for the Department of Energy and minister Radebe said they couldn’t immediately comment.
The partnership of Chinese and Spanish companies invited by Congo to co-develop the project includes China Three Gorges Corp. and State Grid International Development Ltd., and Madrid-based AEE Power Holdings SL. The companies submitted their joint bid in November.
South Africa increasing its off-take to 5,000 megawatts would be “critical” to realizing Inga 3’s ambitions, according to a presentation they gave to the African Development Bank in July. In even the most optimistic forecasts, the plant won’t be fully operational until the late 2020s, according to a timeline included in the companies’ bid.
Finalizing an agreement for 5,000 megawatts will be subject to conditions including South Africa securing buyers for some of this electricity from within the Southern African Power Pool before the end of this year, according to Radebe’s letter. The SAPP is an initiative between regional electricity utilities that seeks to increase access to power.
The necessary cabinet approvals for the agreement are expected by the end of the first quarter, Radebe said.
The tariff should be no more than $30 per megawatt-hour, which excludes transmission costs, according to the letter. Power lines will need to span multiple borders to reach South Africa about 3,000 kilometers (1864 miles) away.
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