Richards Bay gas-to-power plant a ‘game changer’

The R45-billion gas-to-power plant in the pipeline for Richards Bay will not only be a security blanket for the industrial hub’s energy intensive smelters, but it will also create more than a million full-time jobs and make a significant contribution to the South Africa’s GDP over the next 25 years, Zululand Observer reports.

This is according to the head of risk, strategy and combined assurance at the department of energy’s IPP office Sandra Coetzee, who addressed business leaders in Richards Bay on Thursday evening during a lively panel discussion.

She was joined by the Richards Bay Industrial Development Zone (RBIDZ) CEO Pumi Motsoahae and Sasol business development manager of lead, gas and power Jabulani Sithole.

“This is a massive project that will be financed completely by the private sector’s independent power producers [IPPs], and it is expected to attract substantial foreign direct investment – beyond 40%,” said Coetzee.

“The success of the plant will have a multiplicity of benefits for the country. It starts with electricity, but does not end there. It will touch industries and households alike. The implications will be pervasive, covering the spectrum from creating jobs to introducing new technologies.”

The 2 000-megawatt facility will be comparable with the Pembroke Power Station in Wales – the largest natural gas-fired plant in Europe.

Jabulani Sithole (Sasol), Sandra Coetzee (IPP Office) and Pumi Motshoahae during the panel discussion in Richards Bay

Pembroke supplies 3.5 million homes and businesses.

Motsoahae explained a vessel offshore from Richards Bay will receive and store imported LNG that will be converted into electricity and passed on to local industries and consumers through electricity tariffs.

In the long term, he has high hopes that the transport sector will make use of LNG as a cleaner alternative to other fossil fuels, and that the plant will transform the way the city’s residents are supplied with gas for cooking.

“Similar to the United States, we should eventually depend on gas via reticulation, not canisters.”

Sithole said as one of the keen bidders for the project, there were a few bumps in the road that still needs ironing out, adding it was an extremely complex project.

“‘It will be important to take into account the regulatory framework; the required licence to operate within the port and RBIDZ; the number of plans necessary to deliver, and ensuring strong communication with the various authorities involved will be critical.’

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“There are also risks, like the the fact that LPG is sold in dollars and tariffs are paid in rands. The framework would have to make the project viable and we are excited about gas.”

“Sasol has been prospecting gas off the coast of KZN, and this plant will only help the case of prospecting even more.”

Tender interaction

Coetzee said while awaiting the final approval of the updated Integrated Resource Plan (IRP), interaction with interested parties was on the back-burner.

“Because the IRP is so material to the timing of the gas-to-power programme, we decided to adjust our timelines. We await the final IRP anticipated in September and we have not stopped working. Our documents are ready.”

“We are fine-tuning and continuing our EIAs with the RBIDZ so that when final clarity and confirmation is secured, we can move on with confidence and start engaging with the market again.”

The scope of the project for the port will include:

• LNG procurement and delivery

• LNG storage and regasification facilities via a FSRU (or equivalent LNG regasification and storage technology)

• Port infrastructure, including fixed maritime structures and modifications

• Gas transmission pipelines to connect the FSRU (or equivalent LNG regasification and storage technology) with the new power generation facility

• LNG and or gas distribution hubs for third party off-take

• Power plant, including the high voltage connection to the electrical grid

• Arrangements for independent delivery of LNG, and the sale of a modest percentage of gas and LNG to external users.

-Caxton News Service

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