State lays down rules for gas IPP investors

Dane McDonald

Cape Town - The Department of Energy has laid down the rules for potential investors in its Gas Independent Power Producer Programme (IPPP).

"The rules will be very clear... local content will be there, black economic empowerment, black industrialists, youth and women," the head of the Department of Energy's independent power producer (IPP) office, Karen Breytenbach, said on Wednesday.

"We expect all (of this) to deal with the people in our country and give them the opportunities that they deserve," she said, while also highlighting the importance of small business opportunities.

Breytenbach was addressing stakeholders and government delegates at the Gas Options meeting in Cape Town.

Industry leaders are engaging with the Department of Energy on its IPP programme to deliver 3 126 MW of gas-fired power generation.

There will be bankable power purchaser agreements (PPAs), Breytenbach told delegates.

She said pricing would be important for the energy department.

"We have to be light on the fiscus," she said, adding that state-owned enterprises would not take unnecessary risks.

Earlier on Wednesday the National Energy Regulator of SA (Nersa) outlined its pricing methodology for the IPP programme.
Nersa official Nomfundo Mastei told delegates that pricing would be flexible and that five pricing methodologies were developed.

She said investors would be able to choose the methodology that suited their needs.

According to Mastei the pricing mechanism is informed by South Africa's national energy consumption statistics.

Three factors will contribute to the price of gas, she said: the price of the gas molecules, the tariff, and the trading margin.