SA weighs up doubling amount of power it will buy from Inga 3 in DRC

Kinshasa/Johannesburg — SA is considering doubling the amount of electricity it plans to buy from a proposed multibillion-dollar hydro power plant in Democratic Republic of Congo (DRC).

Increasing SA’s electricity purchases has become a linchpin for the companies seeking to build and operate the 11,000MW facility. DRC named Chinese and Spanish groups as co-developers of the plant in October, which could cost as much as $18bn including transmission lines.

SA committed to purchasing 2,500MW from the dam, known as Inga 3, in a 2013 treaty between the two countries. In December, energy minister Jeff Radebe notified the Congolese authorities of his government’s willingness to increase the amount it would purchase.

“I wish to indicate SA’s interest to procure additional capacity of 2,500MW over and above that which was committed under the treaty,” Radebe said in a December 19 letter to Bruno Kapandji, who heads DRC’s Agency for the Development and Promotion of Grand Inga. The letter, seen by Bloomberg, was verified by the agency.

Declining demand

The plan for SA to double future off-take from the dam comes as Eskom struggles to emerge from growing debt accrued from building new plants. Demand for electricity has declined as growth in SA has slowed and some consumers now generate their own electricity.

Eskom said there was no certainty as to when the dam would be finished and it needed to avoid relying too heavily on external sources, Business Day newspaper reported, citing an Eskom spokesperson.

In November, SA’s parliamentary energy committee cast doubt on the wisdom of relying on the DRC. It recommended that alternatives be found to replace the 2,500MW of off-take then contracted “in the event that the Grand Inga project does not come on line in time”.

Spokespersons for the department of energy and Radebe said they could not immediately comment.

The partnership of Chinese and Spanish companies invited by DRC to co-develop the project includes China Three Gorges and State Grid International Development, and Madrid-based AEE Power Holdings. The companies submitted their joint bid in November.

‘Critical’ decision

SA's increasing its off-take to 5,000MW would be “critical” to realising Inga 3’s ambitions, according to a presentation they gave to the African Development Bank in July. In even the most optimistic forecasts, the plant won’t be fully operational until the late 2020s, according to a timeline included in the companies’ bid.

Finalising an agreement for 5,000MW will be subject to conditions including SA securing buyers for some of this electricity from within the Southern African Power Pool before the end of 2019, according to Radebe’s letter. The SAPP is an initiative between regional electricity utilities that seeks to increase access to power.

The necessary cabinet approvals for the agreement are expected by the end of the first quarter, Radebe said.

The tariff should be no more than $30 per megawatt-hour, which excludes transmission costs, according to the letter. Power lines will need to span multiple borders to reach SA about 3,000km away.

Bloomberg