3 April 2008 – The Department of Minerals and Energy (DME)  announced that DME tender 507/1: Introducing Independent Power Producer (IPP) Peaking Power Generation in South Africa has not yielded the desired result as the preferred bidder, the AES Consortium failed to proceed with the project on the basis of the bids submitted.

AgreementDME spokesperson, Beki Khumalo said the DME would embark on a new generation procurement process, as envisaged under the tender.

The request for proposals issued by the DME in April 2006 was aimed at procuring two privately-owned and operated power plants, with a combined capacity of approximately 1 000 MW, through a competitive tender process.

The two power plants, to be located in the Eastern Cape and KwaZulu-Natal were expected to come on stream by the end of 2009. The DME has been working with the AES Consortium since its appointment as the preferred bidder in September 2007 to finalise the contractual arrangements.  

In November 2007, at the request of the AES Consortium, the DME granted a three-month extension to the deadline. However, the AES Consortium is unwilling to enter into the project agreements on the basis of the commitments made in its bids (including commitments in respect of price, commercial terms and the dates for the generation to come on stream).

"Despite the setback on the DME Tender 507/1, we remain fully committed to implementing the Government’s policy of introducing Independent Power Producers (IPPs) in South Africa to contribute to the country’s generation capacity needs," Khumalo concluded.

Issued by: Government Communications (GCIS) on behalf of Department of Minerals and Energy
3 April 2008