South Africa to reopen tenders for gas power plants

By Gugulakhe Lourie

JOHANNESBURG, April 3 (Reuters) - South Africa will reopen a tender to build open cycle gas turbines, needed to help alleviate the country's acute power shortage, the minerals and energy department said on Thursday.

The department said it had terminated a contract initially awarded to a consortium led by U.S. based power company AES corporation (AES.N: Quote, Profile, Research) to build two privately owned and operated power plants by end-2009.

South Africa's power utility Eskom [ESCJ.UL] is struggling to cope with rising demand for electricity due to years of underspending on generating capacity, and is scrambling to find new sources of power.

Minerals and energy department spokesman Bheki Khumalo told Reuters that a new tender process would be launched soon.

"In the next three months we hope that we will be able to issue a new tender process," Khumalo said.

Khumalo said the turbine contract was terminated over commercial terms among other reasons.

"The issues had to do with prices, commercial terms and coming on stream of the plant," he said, but declined to give further details.

The department remained committed to the government's aims to introduce independent power producers.