The preferred bidders of the first bid window for the coal baseload programme are Thabametsi and Khanyisa, Energy Minister Tina Joemat-Pettersson announced on Monday.

The Coal Programme which was launched in December 2014 is the first baseload programme allowing the private sector to generate energy using coal resources.

Thabametsi and Khanyisa will add 863.3 MW to the national energy grid. Joemat-Pettersson said that while this contribution will add “much needed capacity”, the bidders “have a far greater role to play in terms of the overall value they will add to the sector”.

Both bidders were said to have been selected as per the stringent requirements of the first bid submission phase. The Energy Department added that all bids were reviewed and evaluated by the Independent Power Programme Office.

Bidding participants were required to have:

• A minimum South African entity participation of 51%
• 30% black ownership
• A weighted B-BBEE contributor status of level five

While both projects will require R40 billion of debt and equity funding, more than 20 000 jobs will be create in Limpopo and Mpumalanga, where the Thabametsi and Khanyisa’s projects will be based respectively.

Khanyisa will begin commercial operation in December 2020, followed by Thabametsi in March 2021.

Both bidders were backed by foreign developers from Korea, Japan and Saudi Arabia, along with the South African banking sector, including the Development Bank of Southern Africa, and the Industrial Development Corporation.

Joemat-Pettersson said established players partnered with Thabametsi and Khanyisa for the projects, as the size of the investment meant that minor players in the energy sector were not suitable.

The invitation to bid was issued in terms of government’s plan to add 2,500MW to SA’s coal baseload generation capacity by independent power producers.

Joemat-Pettersson said the department was also committed to transitioning to a low-carbon economy, with priority being given to clean energy alternatives for the second coal bid window. The request for proposals for this bid window will be released in the third quarter of 2017-18.