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 11GW facility. Congo in October named Chinese and Spanish groups as co-developers of the plant, which could cost as much as US$18-billion including transmission lines.
South Africa committed to purchasing 2.5GW from the dam, known as Inga 3, in a 2013 treaty between the two countries. In December, 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 500MW over and above that which was committed under the treaty,” Radebe said in a 19 December 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 Eskom struggles to emerge from growing debt accrued from building new plants. Demand for electricity has declined as growth in South Africa 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, Business Day reported, citing a spokesman for the utility.
Cast doubt
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 2.5GW 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 and State Grid International Development, and Madrid-based AEE Power Holdings. The companies submitted their joint bid in November.
South Africa increasing its off-take to 5GW would be “critical” to realising 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.
Finalising an agreement for 5GW 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/MWh, which excludes transmission costs, according to the letter. Power lines will need to span multiple borders to reach South Africa about 3 000km away. — Reported by William Clowes and Paul Burkhardt, (c) 2019 Bloomberg LP
