Eskom, Sasol sign 20-year water deal
(12 Oct 2005)
Johannesburg - Eskom and Sasol have secured a 20-year water supply deal for their expansion projects and current water requirements through a R2.5 billion water project.
The two companies yesterday signed a contract with the department of water affairs and forestry committing them to use water from the Vaal River eastern sub-system augmentation project for at least 20 years, said Rob Lines, Eskom's acting general manager of primary energy.
The contract was renewable after expiry, Lines said. Studies conducted in the past few years had showed that Eskom's power stations in Secunda would need additional water supplies.
The power utility is currently bringing back to service three mothballed power stations in Mpumalanga.
The Vaal River eastern sub-system augmentation project would involve the construction of a 116km pipeline which would channel 160 million cubic metres of water a year from the Vaal river to Secunda, said Martie van Rensburg, the chief executive of the Trans Caledon Tunnel Authority (TCTA).
In terms of the deal, TCTA would manage the project for an initial 20-year period and would hand back the management of the infrastructure to the government. TCTA is a state-owned water infrastructure financing and management company.
The company would finance the R2.5 billion project with money raised from the capital markets, which would be paid back with tariff charges from Eskom and Sasol.
TCTA secured R600 million in bridging finance on Friday from local banks including Absa, Nedbank, Investec and Standard Bank to kick-start the project.
The company would get a credit rating in two weeks from Fitch, the credit rating agency, which would enable it to raise the funds locally and internationally more easily.
Eskom, which had 10 major power stations in the area, would use 60 percent of the 160 million cubic metres of water to be delivered by the project, Lines said. The power stations currently use about 260 million cubic metres of water a year.
Marinus Sieberhagen, a senior manager at Sasol, said its 14km2 plant in Secunda would use 40 percent of the water. He said the company would also need the water for its future expansion. No specific projects had been approved so far.
