Aggreko, the UK-based interim power solutions specialist and Shanduka Group, the South African investment holding company, today announced a ground-breaking project to provide a 107 MW power plant, which will use gas from Mozambique’s Temane gas field to provide an interim power supply to South African power utility Eskom and its Mozambican counterpart, Electricidade de Moçambique (EDM).

The project – following from discussions initiated between Aggreko, Shanduka Group, Eskom and EDM early in 2011 and approved by South African energy regulator NERSA and the country’s Departments of Energy and Public Enterprise – will see the power plant come on stream early in the third quarter of this year. These Power Purchase Agreements are subject to the parties fulfilling a number of conditions precedent before becoming effective. The generation capacity of the plant will be split between the two companies with EDM utilising 15 MW and Eskom 92 MW.

The power plant will be built on the site of Gigawatt Mozambique SA as part of their Concession Agreement at Ressano Garcia, on the Mozambique / South African border. Aggreko will be responsible for building gas interconnections, a major substation, and 1.5 km of 275 kV transmission line as per the agreements with the Matola Gas Company SA and Gigawatt Mozambique SA.

This is thought to be the first project by a private company to supply an interim cross-border power solution to two utilities in southern Africa, and underlines the potential benefits that can accrue to countries sharing resources. Both countries will get much needed additional power, and the project also underlines the importance of Mozambique as an energy hub for the entire Southern African region.

The total value of the project is likely to be in the region of $250 million over two years, including fuel costs.

Rupert Soames, chief executive of Aggreko commented: “This is an important contract for Aggreko, and for southern Africa, under-scoring the benefits of working together for the common good.  Southern Africa is experiencing strong and sustained economic growth and the demand for energy is a major issue. Meeting future needs is going to require an energy mix, and natural gas – which has the lowest environmental impact out of the thermal options – will definitely be part of the solution. We also hope this project will be an example for other countries seeking to optimise their resources and manage the supply of regional power.”

“The partnership with Aggreko creates an opportunity for Shanduka to contribute to the Southern Africa Power Pool. This project will support our vision of creating value while making a difference. Shanduka will oversee the employment and training of about 100 locals and we will also lead the procurement process to ensure South African companies benefit,” commented Phuti Mahanyele, CEO Shanduka Group. “We are also pleased to announce that we will be supporting a school in the area as part of our Adopt-a-School Foundation.”

“As the national power utility and system operator in Mozambique, we at EDM welcome this Aggreko interim power project. We are ready to provide the support required to make the project a reality. The energy generated by the project will play an important role in the future of the Mozambican economy and will also support the socio-economic development in the SADCregion,” said Augusto Sousa Fernando, CEO of EDM.

Hilary Joffe, Eskom spokesperson said, “We are very supportive of this innovative cross-border project and we look forward to the Ressano Garcia Plant coming on line early in the third quarter.”