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On Monday, the Department of Energy announced the Preliminary Information Memorandum (PIM) for the liquefied natural gas (LNG) to Power IPP Procurement Programme.This follows energy minister Tina Joemat-Pettersson’s ministerial determination in May last year for the procurement of 3,125MW of LNG gas: “We will make a preliminary information memorandum on the 3,125MW gas-to-power programme available to the market in the second quarter of the 2016/17 financial year, prior to commencing with the formal procurement process later in the year.

“This will be an important development to stimulate our economy and promote investor confidence.”

She added at the time that through the IPP office, there will be a call for Expressions of Interest from the private sector to partner with state-owned entities for the development of a 600MW additional gas determination.

 LNG projects in the pipeline

According to the Head of the Independent Power Producer Procurement Programme’s office, Karén Breytenbach, the initial focus will be on marine-based floating storage regasification units (FSRUs), due to its affordability, quicker operation time and reduced risk of stranded assets.

Having selected Richards Bay and the Coega Industrial Development Zone as the first two ports, Breytenbach noted that 1 million metric tonnes and 600,000 metric tonnes respectively of gas has been forecast per annum.

She said that the infrastructure costs will amount to an estimated R25 billion ($1.8 billion).

Breytenbach emphasised that the biggest project cost will be the procurement of gas over the 20-year power purchase agreement (PPA) to be signed with state-owned power utility Eskom.

She noted that the IPP Office is looking at how best to hedge this out over a period due to currency fluctuations with gas most probably to be procured in the US dollar.

With 3 million South Africa’s living without access to modern energy carriers government has identified the need to procure and deploy reliable and affordable power.

The release of the PIM will shortly be followed by a Request For Qualification (RFQ), where pre-qualified bidders will be asked to submit documentation by February 2017. The short-listed bidders will then engage in in-depth conversations with the IPP office to determine the exact needs and expectations.

The Office will then “tweak the fringes” according to Breytenbach, and submit the revised RFP, with movements to happen around August 2017.