Chinese Firm Preferred Bidder for Kudu Gas Power Station

THE Chinese company Shanghai Electric has been selected the preferred bidder by power utility NamPower together with Germany’s Siemens AG to construct the envisaged 800-megawatt Kudu power station.

NamPower’s Managing Director Paulinus Shilamba made the surprise announcement at the Namibia International Oil amp Gas Conference on Friday. “I can announce today as ‘breaking news’ that we have selected Shanghai Electric Group with Siemens AG as our preferred bidder. The NamPower Board approved this a week ago,” Shilamba said while presenting an update on electricity supply at the conference. Second on the list as reserve bidder is the Japanese company Mitsubishi Heavy Industries.

The Shanghai Electric Group was ranked number 12 on a list of 15 shortlisted companies for the Kudu power station bid. Siemens was ninth and Mitsubishi Heavy Industries was on placed sixth together Sumitomo Corporation, also from Japan. NamPower had published the shortlist in June 2013.

Shilamba further announced that Standard Bank Namibia was selected as mandated lead arranger (MLA) to handle the project financing. RMB Namibia was selected as MLA reserved bidder. “Negotiations will start soon with the selected bidders,” Shilamba added.

NamPower’s coordinator for the Kudu power station, Muyenga Muyenga disclosed in his progress update that the envisaged subsidiary Kudu Power Pty Ltd would have to purchase gas in US dollars from the upstream companies, which will bring the gas to shore. These are Tullow Oil, Itochu and NamCor.

“Paying in US dollars is a risk due to exchange rate fluctuations,” Muyenga said. “South Africa’s power utility Eskom has been offered to buy 100 to 300 MW electricity from the Kudu plant. Sales will be in South African rand.”

NamPower was waiting to be supplied with Government guarantees for the Kudu project, he added. “In the absence of the US$1,3 billion (about N$14 billion) project receiving timely government guarantees, the project is likely to be further delayed,” according to Muyenga.

“The final investment decision by government for the Kudu power station is expected in December, financial closure by March 2015 and construction to start at that time.”

The Kudu power plant, which will be a combined cycle gas turbine (CCGT) power station is to be operational by the first quarter of 2018.

Brigitte Weidlich is a freelance journalist

Source : The Namibian