Eskom denies delaying Mmamabula project

| Friday February 1, 2008 00:00

The project, which could involve a 7.5-million-ton-a-year to 9-million-ton-a-year coal mine, as well as the 2 100-MW to 2 460-MW power plant, was being pursued by CIC Energy, which is listed on the Toronto Stock Exchange.

Eskom Enterprises MD Brian Dames said he had been given a board mandate to support the IPP project, as well as conclude a mutually beneficial power purchase agreement (PPA) with CIC.

'We are ready to sign the contract with Mmamabula, but they are not ready,' Dames asserted, revealing that an agreement was just about in place by December 14 when he went on leave.

'There was an issue on price, but we were extremely close to a deal. They then came back to me last week to say they were now not sure when their mine could be built as they were battling with prices from their suppliers.'

A clearly irritated Dames said that he intended to again send CIC a letter stating that Eskom was prepared to make a 'firm offer' to purchase power from Mmambula.

'But if I do not receive a response in the next few weeks, then I will issue an offer for an alternative South African IPP,' Dames asserted.

'We are ready to sign with them. Everything has been agreed upon: the term, the schedule, the size of the units and we were so close on the price that I cannot see that as being a major impediment.'

Representatives from CIC Energy in South Africa were unavailable to comment by the time of publication, while the Toronto office was unable to provide immediate comment.

Late last week, CIC Energy announced a delayed schedule for the Mmamabula project, by about six months, owing to the strong demand for power plant builds, and the prevailing engineering resource constraints, which continue to increase lead times for power plant equipment and construction services.

Financial close for the first phase of the project was now expected in the fourth quarter of 2008, followed immediately with the start of construction in the same quarter.

This would push commercial operation of the first unit of the power station to late 2012, or early 2013. The second and third units would come on-line at six-month intervals following the first unit.
(Mining Weekly)