South Africa’s government has issued a tender requesting bidders to submit proposals for the construction of new coal-fired power plants.

The move is part of a string of measures designed to boost electricity generating capacity in the country, which is suffering from power shortages caused by strong economic growth and a funding gap for power utility Eskom’s capital expenditure programme.

Tender notices posted in national newspapers ask bidders to pay a non-refundable fee to 200 000 rand ($17 000) when they submit proposals to build, operate and maintain new plant. The government will offer successful bids a power purchase agreement (PPA) with Eskom.

South Africa’s electricity system has become increasingly strained over recent months and Eskom has been forced to implement rotational load shedding on several occasions.

Last month Moody’s downgraded South Africa’s debt rating because of poor growth prospects. It also cited "ongoing energy shortages as well as rising interest rates, further deterioration in the investor climate and a less supportive capital market environment" as reasons for the downgrade from Baa1 to Baa2.

The government is trying to provide more support for Eskom, embarking on a $2 billion partial privatisation programme to raise funds.

Eskom has a R225 billion ($20.6 billion) funding gap over the next five years. Earlier this year the government announced a raft of measures for the utility, including a R20 billion capital injection.

Sian Crampsie