Projects and energy weekly snippets

Weekly projects and energy updates in South Africa

Eskom given 30 days to meet NERSA requirements for 2018 tariff application

The state-owned utility is seeking a 19.9% hike from 1 April 2018, having been granted a 2.2% increase from 1 April 2017.

As part of the application, Eskom requested permission to deviate from aspects of the updated MYPD methodology and the MIRTA, stating that it was not in a position to meet the revised information requirements.

This request was strongly opposed by several stakeholders, including Business Unity South Africa, which suggested that the request represented an attempt by Eskom to motivate for price increases without justification.

Eskom requested exemption from the MYPD methodology with regard to: providing a valuation of its regulatory asset base (RAB); disaggregated primary-energy costs relating to coal volumes and handling, as well as water; and research and development.

Engineering News, 11 August 2017 

Malawi contracts Japan’s Mitsubishi to build 18 MW hydropower plant

The Malawi government and the Japanese International Cooperation Agency will jointly finance the project, where construction will start in October, with completion expected three years later.

Egenco CEO William Liabunya says the Tedzani IV power station project is one of the projects the utility is planning to implement to meet the rising demand for electricity in Malawi.

“We know that 18 MW will not be enough to meet Malawi’s electricity needs. However, it will help offset the current shortfall,” he says.

Engineering News, 11 August 2017 

Japan-Africa initiative to help improve electricity access on the continent

Through the JAEI, the Japanese government intends to provide up to US$6 billion in both concessional and non-concessional loans to support the New Deal on Energy for Africa.

The New Deal on Energy for Africa is an African Development Bank (AfDB) led initiative aimed at ensuring the continent achieves universal electricity access by 2025, with a strong focus on encouraging clean and renewable-energy solutions.

The AfDB contends that the initiative will require investments ranging from US$6 billion to US$90 billion a year to provide 160 000 MW of new capacity, 130 million new on-grid connections and 75 million new off-grid connections. The bank has committed US$12 billion of its own resources over the next five years.

The Japanese government, through the JAEI, intends to finance activities associated with energy projects, ranging from preparation to construction, operation and technical assistance.

Engineering News, 11 August 2017 

Eni, Anadarko to build LNG terminals in Mozambique

The terminals will be built in Cabo Delgado province, where Mozambique has made massive gas discoveries that could transform it from a poor African country into a major energy supplier to Asia.

The agreements were signed by Mozambique's energy minister Letícia Klemens and the regional heads of Eni and Anadarko, a Texas-based oil producer. The two companies will separately build their own terminals, Klemens told a press conference. She declined to give the size of the investments.

Eni is spending US$8 billion to develop a gas field off the coast of Mozambique, while Anadarko is developing Mozambique's first onshore LNG plant consisting of two initial LNG trains with a total capacity of 12 million tonnes per annum.

More than US$30 billion is expected to be invested in Mozambique's natural gas sector to build capacity to produce 20 million tonnes per year of LNG, with the first exports due to start in 2021.

Engineering News, 11 August 2017 

Eskom to sell more surplus power in major turnaround

South Africa had regular power cuts in 2015 that hit key industries when demand exceeded capacity, but Eskom's new coal-fired plants Kusile and Medupi have boosted the national electricity grid.

Eskom CEO Johnny Dladla said the company's aging power plants prone to breakdowns had benefited from a better maintenance programme, helping to improve plant availability to 77.3% at the end of March from 69.9% in 2015.

"In terms of our existing generation sustainability strategy, we aim to achieve 80% plant availability, 10% planned maintenance and 10% unplanned maintenance by 2020,” Dladla said in a statement.

He said Eskom had adopted an "aggressive" plan to improve volume sales by encouraging annual growth of 2.1% in local demand and an 8% improvement in export sales over the next five years.

Engineering News, 10 August 2017 

Zimbabwe: Hwange expansion project making headway

Zimbabwe’s expansion of the Hwange Thermal Power Station seems to be is making headway, as the company contracted to do the works has concluded a power purchase agreement (PPA) with the Zimbabwe Electricity Transmission and Distribution Company (ZETDC).

ZETDC managing director, Engineer Julian Chinembiri, told the Herald Business on Monday that the Zimbabwe Energy Regulatory Authority (ZERA) had approved a tariff of 0.11c kWh.

"The power purchase agreement is now in place and this is a very critical step towards reaching financial closure," Chinembiri said.

Sino-Hydro won the contract to expand Hwange Thermal Power Station, particularly units 7 and 8.

On completion, the project is expected to increase the capacity of the country's largest power plant by 600 MW.

ESI Africa, 10 August 2017 

Sunrise Energy's ZAR1bn LPG storage facility to boost energy security, downstream competition

The facility, which is Africa's largest open-access LPG import terminal, was launched on Tuesday. It was built to advance the development of the oil and gas sector in the province. 

The facility is a public–private partnership between Mining, Oil & Gas Services (MOGS) and the Industrial Development Corporation (IDC).

Sunrise Energy is 60% owned by MOGS, with the IDC holding a 31% stake and another company, Ilitha, holding 9%. Royal Bafokeng Holdings owns 51% of MOGS, with the balance being held by the Public Investment Corporation (PIC).

Economic Development Minister Ebrahim Patel said the launch of Sunrise Energy consolidated the West Coast’s role as South Africa’s energy corridor.

“The 140 km corridor contains the most diversified energy mix in the country, including petroleum, gas, renewables, oil and nuclear energy,” he noted.

Engineering News, 7 August 2017

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.

For more information contact Charles MaraisPhilip van Rensburg or Mzimasi Mabokwe.

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