COEGA PRESENTATION

CCGT EOI SESSION

14 DECEMBER 2009

CONTENT

• Coega General Overview

• The Project

– Overview

– Technical Conceptual Study

– Commercial Aspects

• Other Considerations

• CDC Procurement Policy

• Questions

COEGA GENERAL OVERVIEW

ORGANISATIONAL MANDATE

• Attraction of Investment (Local & Foreign)

• Enable Technology Transfer

• Human Capital Development

• Creation of Decent Work

• Economic Development

• Facilitate Enabling Infrastructure Investments

• Assist Government on Project Delivery

COEGA BUSINESS MODEL

ECONOMIC ZONE (+NMBSP)

EXTERNAL

SERVICES

COEGA DEVELOPMENT CORPORATION

Investment Promotion Operations Consultancy Services

Fa

cilit

ies

Infr

astr

uc

ture

Su

pp

ort

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es

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Lo

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tics

Finance

Glo

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ark

ets

Pro

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t

De

ve

lop

me

nt

Investor Services

(OSISC)

Systems

ICT

Marketing

Research

Ne

go

tia

tio

ns

Infrastructure Development Human Capital

Audit

Human Resources, Legal, Office Management, Travel

Po

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lio

De

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Tra

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SM

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P

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gECONOMIC ZONE (+NMBSP)

EXTERNAL

SERVICES

COEGA DEVELOPMENT CORPORATION

Investment Promotion Operations Consultancy Services

Fa

cilit

ies

Infr

astr

uc

ture

Su

pp

ort

Se

rvic

es

Cu

sto

ms +

Lo

gis

tics

Finance

Glo

bal M

ark

ets

Pro

jec

t

De

ve

lop

me

nt

Investor Services

(OSISC)

Systems

ICT

Marketing

Research

Ne

go

tia

tio

ns

Infrastructure Development Human Capital

Audit

Human Resources, Legal, Office Management, Travel

Po

rtfo

lio

De

ve

lop

me

nt

Tra

inin

g a

nd

De

ve

lop

me

nt

Em

plo

yee

Re

lati

on

s

Re

cru

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t a

nd

Pla

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SH

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Infr

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D

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SM

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Man

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ent

• Framework Plan: Phased Development

CHANNELS OF INTERVENTION

• Industrial Development Zone (IDZ)

• Nelson Mandela Bay Logistics Park (NMBLP)

• Physical Infrastructure Programme Management

• Strategic Advisory

• Human Capital Development (HCS)

• Economic Research

WIDER ECONOMIC RELEVANCE

POLICY RELEVANCE OF COEGA

• Facilitate the creation of an industrial complex with clear

economic advantages;

• Provide the location for the establishment of strategic

investments;

• Take advantage of existing capacity that promotes

integration with local industry

• Increase value-added production; and

• Create employment and other economic and social

benefits in the region in which it is located

SIGNED INVESTORS

SECTOR VALUE DIRECT

EMPLOYMENT

INDIRECT

EMPLOYMENT

Chemicals R6 billion 800 1800

Logistics R85 million 417 21178

Auto components R694 million 616 1682

Alternative energy R1.5 billion 50 350

BPO R31 million 120 48

Downstream metals (Iron and

Steel)

R75 million 120 100

Food & Beverage Industries R4 billion 5015 9450

Manufacturing R50 million 50 40

Total R12.4 billion 7188 34648

CDC & THE CCGT PROJECT

• CDC facilitated in terms of attracting investment and

enabling IPP

• Consistent to policy of Government

• Worked with Departments of Mineral & Energy and now

Department of Energy

• Takes cognisance of changes in the energy sector

institutions and roles

THE PROJECT

PROJECT OVERVIEW

• Background

– Project was started by major entities

– Independent power production was a challenge and the entities withdrew from the process

– Project is relevant and has been accepted at National Gov. level

– CDC was involved early 2008 to do groundwork for an IPP

• Motivation

– Development of IDZ taking the future needs into account

– There is a need for a baseload power station in the EC

– Government imperative of opening the IPP market

– The project is in line with the Integrated Resource Plan

– Reduce SA’s carbon footprint

– Efficient technology

– Diversification of SA’s fuel sources

PROJECT OVERVIEW (2)

• Concept

– Up to 3200MWe envisaged

– Baseload Power Station

– LNG as the preferred fuel source

• Why Coega

– Transmission lines and substation availability

– Port of Ngqura with potential infrastructure and logistical facilities

– Large Industrial users in the IDZ

– Seawater cooling availability

– Grid stability with EC baseload

– Local power security

– Availability of land

SITE LOCATION

Floating Solution

Cryogenic pipelines

• Pre-Feasibility Report– The Project

– Project Owner

– Value Proposition & Alignment of Objectives

– Economic Analysis

– Electricity Sector Analysis

– Natural Gas Sector Analysis

– Regulatory and Legal Framework

– Commercial Structures

– Target Strategic Partners

– Technical Study

– Financing Options

– Project Financial Viability

– Risk Mitigation

• Class II Cost Estimate (ROM 40%)

TECHNICAL CONCEPTUAL STUDY

16

TYPICAL POWER PLANT INTERFACES

17

TYPICAL DESIGN BASIS

• Site location is fixed (bordered by Zone 8 & 10)

• 3200 MWe Combined Cycle Power Plant (4 x 800 MWe)

• Fuel is Natural Gas (regasified on site from imported LNG)

• Some municipal effluent (water) available for re-use

18

Power Plant Site

CONCEPTUAL PLANT LAYOUT

19

FUEL SUPPLY

• 3200 MWe

• ~4 million tons LNG per year

(8.6 million m3 per year)

• Requires a ship every 5

days (135,000 m3 capacity)

• Onshore regasification

20

COOLING WATER SYSTEM

• Significant condenser cooling

requirements (approx 1 million m3 per

800MW per day)

• Cooling Options

– Open Cycle (once through cooling)

– Closed Cycle (wet cooling towers, dry

cooling)

• Solution will be influenced by

– Marine regulations (sea water intake, sea

water temperature rise)

– Site conditions (elevation, water availability,

water and ambient temperatures)

• EIA and detailed study needed to

determine optimal cooling solution 21

COMMERCIAL ASPECTS

• Conceptual Project’s Commercial Structure

GovernmentAuthorities

O&MContractor

EPC Contractors

BOT Law/Concession Agreement/Licences/ Permits/Other Approvals

Equity/Joint Venture Agreement

Financing/Security Documentation/Equity Bridge Loan

EPC Contract(s) O&M Agreement

ProjectCompany

ProjectSponsors

(Consortium Agreement)

ProjectLenders

Offtaker

Power Purchase Agreement (“PPA”)

Land Owner

Land Purchase/

Lease/Land Use Rights

Bank Performance Bond (O+M)

BankPerformance Bond (EPC)

Fuel Supply/Transportation AgreementsNote: There will also be direct agreements between the Project Lenders and various project parties.

Sub ContractorSub Contractor

Fuel Supplier/

Fuel Transporter

Water Supplier

GovernmentAuthorities

O&MContractor

EPC Contractors

BOT Law/Concession Agreement/Licences/ Permits/Other Approvals

Equity/Joint Venture Agreement

Financing/Security Documentation/Equity Bridge Loan

EPC Contract(s) O&M Agreement

ProjectCompany

ProjectSponsors

(Consortium Agreement)

ProjectLenders

Offtaker

Power Purchase Agreement (“PPA”)

Land Owner

Land Purchase/

Lease/Land Use Rights

Bank Performance Bond (O+M)

BankPerformance Bond (EPC)

Fuel Supply/Transportation AgreementsNote: There will also be direct agreements between the Project Lenders and various project parties.

Sub ContractorSub Contractor

Fuel Supplier/

Fuel Transporter

Water Supplier

COMMERCIAL ASPECTS (2)

• Development Phase

– CDC is looking for a potential IPP’s from an early stage

– CDC will continue to act as a facilitator until PPA signed

• Construction Phase & Operational Phase

– CDC may look at different forms of compensation in terms of its

landlord and facilitation role

– Capital structure is still to be determined

– Government through its entities may consider participating in the

shareholding of the company

– Further details will be highlighted in the RFP and finalised during

the negotiations

OTHER CONSIDERATIONS

OTHER CONSIDERATIONS

• Regulatory environment

– Recent Government Announcement confirm proposed changes in

Institutional Arrangements and the Role of Eskom

– Detail to be clarified in 2010

– Imminent establishment of Independent Systems Operator

– Buying of Power

– Environmental licensing requirements

– Other licensing requirements

• The role of the CDC in the project

– To continue with the EIA

– To apply for licences

– To facilitate the PPA

– May facilitate for gas sourcing (if necessary)

STAKEHOLDERS ROLES

• Stakeholders and their roles

– Various entities that are stakeholders

– Assist with the Regulatory environment

– Ensure that the necessary support is received

– To continue with the relevant work to bring the project to fruition

CDC PROCUREMENT POLICY

BACKGROUND

• COEGA is implementing BB-BEE as per DTI requirements

(RFP Stage)

• Multinational and national Contractors, Service Providers

and Consultants – compliant with BB-BEE (RFP Stage)

• Encourage participation of SMME and Local (EC)

companies

• COEGA Procurement Policy and Procedures (website)

Element Weighting Primary Codes

Reference

Ownership 20 Points Code 100

Management Control 10 Points Code 200

Employment Equity 15 Points Code 300

Skills Development 15 Points Code 400

Preferential Procurement 20 Points Code 500

Enterprise Development 15 Points Code 600

Corporate Social Investment 5 Points Code 700

THE GENERIC SCORECARD

SOCIO-ECONOMIC IMPERATIVES

• TWO IMPORTANT REQUIREMENTS

• SMME Participation

– SMME participation is vital

– SMME Development Programme and Mentorship

• LOCAL (EC) Participation

– Participation of Local companies in each Project

– Source Local Companies

EVALUATION OF EOI

• Bids must be submitted in sealed envelope, 1 original & 2

copies

• To be deposited into CDC Tender Box,

• Bids received by Telegram, fax or email will not be

considered

• Prequalification will be based on Item 6.4 pg 16/22

EVALUATION OF RFP

• This will be done in two stages after further consultations

with the National Government Departments

• STAGE 1 - Request for Proposals

– Pre qualified companies will be issued RFP documents

– RFP documents will be expected to demonstrate Price, Technical

Expertise / Capacity and Empowerment (BB-BEE)

• STAGE 2 - Approval Process

– Preferred Company (ies) will be advised

– Unsuccessful companies will be advised

EOI TIMELINE

ACTION START DATE COMPLETION

DATE

1st Publication &

Advertisement

30 November 2009 01 February 2010

Release of Expression of

Interest Document

30 November 2009 22 January 2010

Non Disclosure Agreement 30 November 2009 22 January 2010

Non Compulsory

Presentation

14 December 2009 14 December 2009

Period for EOI Clarification 07 December 2009 29 January 2010

EOI Closing Date 01 February 2010

@12h00

CONCLUSIONS

• Closing Date &Time – Monday 01 February 2010 @ 12h00

• EOI must be submitted – COEGA Tender Box

• Communication will only be in writing between specified

dates

• All communication - tenders.ccgt@coega.co.za

• LATE submissions will not be accepted

• COEGA Web Site www.coega.com

QUESTIONS