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The power-sharing agreement between President Mwai Kibaki and his new Prime Minister Raila Odinga has been near universally applauded as a solution to the country’s post-election problems and is seen as the key to unblocking finance and projects (AE 132/20, 131/21, 130/1).

If pessimists are right, it may come to be seen as a balmy period when the strong macroeconomic figures registered by a majority of economies, and the upturn in investor interest from fixed income assets to downstream hydrocarbons mega-projects, suggested that economic positives could now outweigh the perennial political risk factors when assessing African business – the trend recorded by African Energy in 2006-07 (AE 129/22, 120/1).

Markets are warming to coal and other investments that can contribute to resolving southern Africa’s power crisis.

South Africa’s biggest engineering and construction group was widely expected to present strong H2 2007 results to the Johannesburg Stock Exchange on 27 February, with diluted headline earnings per share (HEPS) expected to show an increase of 50%-60% over the 135 cents recorded in H2 2006; full-year HEPS (to 30 June 2008) was also expected to grow by 50%-60%.

Eskom has invited proposals from private investors to develop up to 3,000MW of new power generation capacity by June 2012. The beleaguered utility said that the new capacity was required to help meet growing demand until the commissioning of its Medupi and Bravo coal-fired plants, as well as a planned nuclear reactor, which are expected to enter service between 2013 and 2017 (AE 132/1).

South Africa and the wider Southern African Power Pool (SAPP) region were plunged into chronic power cuts this winter because ultimately the numbers didn’t add up: with reserve margins (the gap between useable installed capacity and demand) withering to dangerously low levels, rains in January further reduced the percentage of the 36,000MW generation capacity that Eskom could put into its grid. South Africa just didn’t have enough electricity – a grim reality that Eskom has been blaming the SA government for (because a decade ago it sought to break up its monopoly, unsuccessfully), and for which President Thabo Mbeki’s administration has made an unprecedented apology.

Engineering consultancy Parsons Brinckerhoff is building up its southern Africa and mining industry personnel, seeing a substantial business opportunity from coal-to-power and other minerals-related projects in the electricity-starved region. In recent appointments that PB believes will help expand its already substantial sub-Sahara business, Gavin Young has moved from being Johnson Matthey plc’s South Africa managing director to head PB’s expanding Craighall, Johannesburg-based operation, while mining and nuclear specialist Nick Edmunds has come from 17 years with Wardell Armstrong as director of mining. Edmunds’ role, the company said, “will enable PB to marry its power generation business with a growing requirement for mining services.”

Tullow Oil’s problems with the Kinshasa authorities over its acreage on the western side of Lake Albert have failed to deter other companies from seeking blocks there.

Developer CIC Energy Corporation is blaming tough market conditions for delays in its coal-to-power (CTP) scheme, mainly to supply South Africa from a major Botswana coal field, but still sees the Mmamabula Energy Project (MEP’s) first phase starting commercial operations by Q4 2012/Q1 2013.

Sasol, iGas and Compania Mozambicana de Gasoduto are building a gas compression station to facilitate a 20% expansion of natural gas delivery from Mozambique to South Africa by the end of 2009.

Two consortia led by US and French rivals Westinghouse and Areva have submitted bids to Eskom for the first of a series of planned nuclear power plants (AE 131/7, 116/9). Bids for the first 3,000MW-3,500MW plant, dubbed Nuclear 1, were submitted at the end of January

The Hitachi group awarded South African construction and engineering group Murray & Roberts the boiler construction contract for Eskom’s planned Medupi and Bravo coal-fired power plants.

South Africa’s urgent requirement for power supply, shared by many other African economies where sustained growth has added to energy demand, will produce a range of responses – some of them pushing SA’s usually financially conservative leaderships towards private financing solutions.

UK-based developer IPSA Group Plc has signed a memorandum of co-operation with the South African government’s Central Energy Fund (CEF) to supply a power plant for the Coega Industrial Development Zone outside Port Elizabeth. The agreement clears IPSA to proceed with its project for a 1,600MW combined-cycle gas turbine generating facility at Coega,

With capacity constraints causing load-shedding at home and export shortfalls to neighbouring countries, Eskom has expressed disappointment at the tariff increase approved by National Energy Regulator of South Africa (Nersa). Eskom said Nersa had approved a price increase of 14.2%, compared to the 18.7% sought by the utility.