Sunbird Energy has significantly advanced activities and negotiations with Eskom to investigate indigenous gas sales from the IGP to Eskom’s Ankerlig Power Station in the Western Cape. Sunbird singed a Memorandum of Understanding (MoU) late last year.

Under the terms of the MoU, a working committee was established in early 2014 comprised of Eskom and Sunbird representatives. The working committee and its technical and commercial sub-teams have had a series of engagements to develop the integrated project development plan, discuss and resolve various technical interfaces, and discuss and agree commercial terms.

At present, Eskom and Sunbird are working together to develop a gas sales agreement (GSA) term sheet, which will be incorporated into a Heads of Terms Agreement that is planned to be signed in mid-2014, with the aim of ultimately signing a fully termed GSA by late 2014.

Eskom, South Africa’s state owned energy company, is the largest producer of electricity in Africa, and one of the world’s largest utilities in terms of generation capacity and sales. Eskom generates approximately 95% of the electricity used in South Africa and approximately 45% of the electricity used in Africa.

To date, the Ankerlig Power Station has nine turbines and was designed to be powered by either natural gas or liquid fuel, kerosene or diesel. To date, the facility has been fuelled on high cost diesel and is running significantly more hours than was intended when it was commissioned, resulting in a heavy cost burden for Eskom.

IGP’s gas would substitute the diesel currently being burned in Ankerlig’s turbines, delivering to Eskom a substantially cheaper source of cleaner fuel.

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