Projects and Energy Weekly Snippets
6 February 2015
Stanlib enters infrastructure, private equity sectors with ZAR1.2bn fund
Financial services provider Stanlib aims to channel the bulk of a ZAR1.2 billion infrastructure equity fund into some of the infrastructure projects under way in South Africa, with a particular focus on renewable energy.
Fundraising was closed after the financial services provider successfully raised more than ZAR1 billion in total commitments, with around ZAR800 million raised from local institutional investors since its first close in May 2013. Stanlib said the fund, which would also inject capital into projects across Sub-Saharan Africa, would invest in sectors requiring third-party capital for projects presenting an attractive combination of risk and return.
The ten-year closed-ended infrastructure fund was the company's first foray into infrastructure and private equity, explained Stanlib CEO Seelan Gobalsamy. He added that this formed a part of the asset manager's strategy to bolster its alternative investment capabilities.
While renewable energy was a key focus of the fund, the group would also examine investment opportunities in water, power, transport, telecommunications, and oil and gas infrastructure projects.
Engineering News, 27 January 2015
ACSA invests in solar energy for regional airports
Airports Company South Africa (ACSA) has called on interested parties to bid for the design of two 500 kWp photovoltaic (PV) solar plants, for installation at Upington International and Kimberley airports respectively. The solar programme is a long-term project that could span between five and 15 years, with the roll-out to be undertaken in a phased approach.
ACSA regional airports GM Yvette Schoeman says that this formed part of the company's plan to install solar energy plants at all six regional airports over the next three to five years to make them more self-sufficient. She added that by making use of renewable energy, the regional airports seek to improve their environmental impact by decreasing the amount of pollution they produce, effectively reducing their carbon footprint.
Meanwhile, ACSA had appointed a contractor to install a 750 kWp solar PV plant at the George airport with construction expecting to start within the coming two months. Bids for Upington and Kimberley solar PV plants are set to close on 2 March and 5 March 2015 respectively.
Engineering News, 2 February 2015
Norway's Norfund, UK's CDC team up to bring more power to Africa
State-owned development funds from Norway and Britain have teamed up to build more power plants in Sub-Saharan Africa. Under the deal, which is expected to close by June 2015, Norfund will buy 30% of power company Globeleq Africa from minority shareholders, while CDC will take a direct 70% interest, which it has owned so far through the Actis Infrastructure 2 Fund.
Norfund and CDC partners said in a statement that the aim is to bring more projects to the construction phase, which could potentially result in over 5 000 MW of new generating capacity. The partners said they will focus their activities in Sub-Saharan Africa, where only around 32% of the population has access to electricity.
Globeleq Africa has eight power plants in Ivory Coast, Cameroon, Kenya, South Africa and Tanzania with a total gross capacity of 1 095 MW. It has already secured deals to develop more power plants in Ivory Coast and Cameroon. Norfund, which also has a partnership with Norwegian hydropower producer Skatkraft, has invested about $700 million in power projects, including in Africa.
Engineering News, 3 February 2015
Authority seeks bidders for LHWP Phase 2 work packages
The Lesotho Highlands Development Authority (LHDA) has issued three tenders for construction upgrading, geotechnical investigation works and resettlement planning services relating to Phase 2 of the multibillion rand Lesotho Highlands Water Project (LHWP).
The LHWP is a binational initiative between the governments of Lesotho and South Africa, and is the result of a treaty signed between the two governments in 1986 to establish an inter-basin water transfer scheme, which originally aimed for the delivery of 70m3/s of water to South Africa.
Phase 1 of the project saw the construction of the Katse and Mohale dams in Lesotho, as well as the transfer tunnel between the Mohale dam and the Katse reservoir. The second phase of the LHWP would comprise a water transfer component and a hydroelectricity component and the establishment of advanced infrastructure such as roads, camps, power lines and a telecommunications system.
The recently issued tenders focused on work required under the water transfer component, which entailed the construction of a concrete-faced rockfill dam at Polihali as well as the development of a gravity tunnel connecting Polihali reservoir to the Katse reservoir.
Engineering News, 3 February 2015
ANC opts to keep Eskom in one piece
The African National Congress (ANC) decided at its annual Lekgotla to sink the Independent System Market Operator Bill that would have led to the restructuring of the electricity sector. The ANC also resolved that more independent power producers must be brought into the industry over the next 18-30 months, that natural gas from Mozambique should be procured to ameliorate the power supply crisis, and that private investors should be encouraged to invest alongside Eskom in ageing power stations.
The ANC is of the view that the bill, aimed at establishing a state company to act as the buyer of electricity from private and public producers and to sell it to distributors and buyers at wholesale prices, was not a viable option as it would "split up" Eskom and negatively affect its balance sheet.
Globeleq SA MD Mark Pickering said, however, that although he agreed an independent operator was not the best route for SA, the solution lay in separating Eskom's generation and transmission businesses. This norm to vertically disaggregate the industry has been applied in many other countries and SA is unusual in not having taken that step, he argued.
Business Day, 2 February 2015
Stop Eskom monopoly – Maimane
"Let's break this monopoly before Eskom breaks us, and allow independent power producers," Democratic Alliance leader in Parliament Mmusi Maimane told party supporters in Johannesburg. Government should allow other power producers to compete and end Eskom's monopoloy, the DA said.
The DA held a protest against rolling blackouts outside Eskom's head office in Megawatt Park, Sunninghill, where they argued that President Jacob Zuma should scrap the nuclear power deal as it has nothing to do with the needs of South Africans right now. He called on Parliament to pass the Independent System and Market Operator Bill. The bill, if passed, would allow independent power producers to enter the electricity market.
Eskom implemented more stage one rolling blackouts on Wednesday.
Engineering News, 4 February 2015
Transnet leaps and bounds ahead of Eskom
Transnet, the state-run rail and ports operator, is financing most of its seven-year ZAR312 billion investment programme from its own balance sheet. Power generator Eskom, on the other hand, faces a ZAR225 billion funding deficit as it builds new plants to relieve chronic electricity cuts and depends on government support for local debt.
The key difference between the companies, which both have state guarantees, is Transnet has control over some of its pricing, unlike Eskom, said Rand Merchant Bank analyst Elena Ilkova. What Transnet is able to do is set tariffs that reflect accurately its cost structure, she continued, and that is exactly what Eskom is unable to do.
As provider of 95% of power in Africa's second-biggest economy, the government sets electricity tariffs through a national energy regulator. Eskom's funding shortfall increased after the authority in 2013 granted the utility only half the average percentage increase in annual tariffs sought for the five years through 2018. Weak operational performance combined with insufficient tariffs and a large capex programme continue to weigh on the company.
Eskom plans to sell at least three international bonds this year to help cover the funding gap as the government prepares to announce how it will provide at least ZAR20 billion in emergency funds.
Business Day, 5 February 2015
The above reflects a summary of certain news articles published during the preceding week. It is not an expression of opinion in respect of each matter, nor may it be considered as a disclosure of advice by any employee of Hogan Lovells.