Shanghai Electric Awarded Namibia's $1.2 Billion Kudu Power Project

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Written by Richard Finlayson, Senior International Editor for Industrial Info Resources (Sugar Land, Texas)--Shanghai Electric (OTC:SIELY) (Shanghai, China) has been picked as the preferred bidder for Namibia's proposed $1.2 billion, gas-fired power plant. Namibia's power utility, Nampower (Windhoek), made the announcement.

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The plant would be fed by natural gas from the offshore Kudu Field.

The gas would be pumped to the plant from the Kudu Field, which is 170 kilometers offshore and currently is being developed by Tullow Oil (LSE:TLW) (London, England), Itochu (NASDAQ:ITOCY) (Tokyo, Japan) and NamCor (Windhoek). The original specification for the combined-cycle power plant was a generating capacity of 800 megawatts (MW), but this has now been raised to 1,050 MW. Power would be fed to the Namibian and South African grids.

Nampower's subsidiary, specially created Kudu Power Limited, would purchase in U.S. dollars from the upstream developers. Sales of between 100 and 300 MW to South Africa's power utility, Eskom, would be in South Africa's rand currency.

If final negotiations with Shanghai Electric fail, a consortium of Mitsubishi Hitachi Power Systems (Yokohama, Japan), Sumitomo (Tokyo, Japan) and Posco Energy (Seoul, South Korea) would serve as a reserve bidder. Siemens AG (NYSE:SI) (Munich, Germany) has been chosen to supply generators and turbines for the project.

There could be further delays in the long-awaited project start, as Nampower is awaiting government guarantees on the project. The government's final decision on the project is expected in December, with financial closure in March 2015, followed by the start of construction of the plant, which would be operational in the first quarter of 2018.

Standard Bank Namibia is the mandated lead arranger (MLA) for project financing, with RMB Namibia as MLA reserved bidder.

For related information, see July 26, 2013, article - Namibia's 800 Megawatt Kudu Project Prequalifies 15 Out of 45 Bidders.

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