The world’s largest temporary power generation company, Aggreko and local joint-venture partner Shanduka Group of South Africa will supply 107 megawatts of gas-fired power to Mozambique and South Africa in a $250 million deal, the company said on Wednesday.
In a bid to address power shortage in the Southern African region, amidst fast-rising demand for power stemming out of rapid development of its emerging markets, Mozambique and South Africa has signed am energy purchase deal with Aggreko to address shortages, with the next two years seen as crucial until new power plants start coming online.
In 2008, Africa’s largest economy experienced a near breakdown of its electricity grid, forcing mines and smelters to shut for days. The consequence of crisis ran into billions of dollars in lost output and hit neighbouring countries who depend on South Africa for power supply.
British-based Aggreko, a world leader in temporary power provider, signed the power purchase deals with South African power utility Eskom and Mozambique’s Electricidade de Mocambique (EDM) to supply electricity from the third quarter of this year until July 2014. Eskom will buy 92 MW and EDM the remaining 15 MW, Reuters reports.
The energy company will build gas interconnections, a substation and a 275 kV transmission line as part of the two-year $250 million Eskom/EDM deal, with part of the infrastructure yielded to EDM at the end of the contract.
The gas used in the plant, to be based at the Ressano Garcia border between South Africa and Mozambique, is part of gas given to Mozambique as a royalty by petrochemicals group Sasol, which is operating the onshore Pande/Temane gas fields.
According to Aggreko’s chief executive, Rupert Soames, opportunities of replicating the project abound in the region as Aggreko could sell power to utilities or directly to private customers, including mines.
The CE also said that the gas-fired power was more expensive than electricity generated by Eskom’s own coal-fired power plants, but declined to give details.