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Publish Date : 12-Jun-2013

The first large scale independent power producer (IPP) based projects in South Africa is 670 MW Avon and 335 MW Dedisa peaking power plants, which has inked power purchase agreement (PPA) entered into with state owned power utility Eskom. Mitsui has established two project companies in South Africa, and these projects will sell electricity to Eskom for 15 years from their completion through two power generation plants.

The construction of a 670 MW diesel fired open cycle power plant near Durban is involved by Avon project and the Dedisa project involves the construction of a 335 MW diesel fired simple cycle power plant near Port Elizabeth. The electricity will be supplied to the major cities in the southern sector of South Africa.

US$1 billion is the anticipated cost of project, which is to be provided on the basis following a loan agreement between the project companies and South African lenders. Commercial operation of these plants is anticipated to start from the first quarter of 2016 in the case of the Avon project and from the third quarter of 2015 in the case of the Dedisa project.

Investments from Mitsui, GDF Suez and two local companies is bagged by this project through their own investment vehicles. Due to a tight power supply and demand balance, the South African government instituted the Integrated Resource Plan 2010, a power development plan which will double South Africa's power capacity from about 44 GW at present to approximately 80 GW by 2030. The projects were among those receiving approval under the plan.

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