OREANDA-NEWS. Mitsui & Co., Ltd. will participate in two power generation projects that are the first large scale IPP(Independent Power Producer) basis projects in the Republic of South Africa (the Projects).

Two project companies established in South Africa, in which Mitsui will invest through its subsidiary investment vehicle in the United Kingdom, entered into a power purchase agreement with South African state-owned power utility company Eskom on 3rd, June, 2013.

The Projects will sell electricity to Eskom for 15 years from their completion through two power generation plants. One (Avon Project) involves the construction of a 670 MW diesel fired open cycle power plant near Durban, and the other (Dedisa Project) involves the construction of a 335 MW diesel fired simple cycle power plant near Port Elizabeth, and the electricity will be supplied to the major cities in the southern sector of South Africa.

The total cost of the Projects will be approximately EUR 780 million and will be financed on a project finance basis following a loan agreement between the project companies and South African lenders. Commercial operation is anticipated to start from the first quarter of 2016 after construction commences in the case of the Avon Project and from the third quarter of 2015 in the case of the Dedisa Project.

The project companies have received investments from Mitsui, GDF SUEZ (a global leading independent power producer) and two local companies through their own investment vehicles.

Due to a tight power supply and demand balance, the South African government instituted the Integrated Resource Plan 2010, a power development plan which will double South Africa's power capacity from approximately 44 (forty-four) GW at present to approximately 80 (eighty) GW by 2030. The Projects were among those receiving approval under the plan, and they are expected to improve the supply and demand balance and contribute to the industrial development of South Africa.

Mitsui has been focusing on the African region and will continue to be involved positively in new business development in that region in addition to its successful development of large scale gas field in Mozambique.

Well aware that a shortage of power is one of the hurdles of economic growth in Africa, Mitsui, through the power business which is one of its core businesses areas, will continue to support the optimization of power supply capacity and contribute to economic development of the African region.