Significant amendments to the request for proposal (RFP) documentation for South Africa’s much-delayed procurement of 2 000 MW of gas-to-power capacity have been unpacked, including an updated fuel pricing formula and an increase in the minimum load factor to 50% for the 20-year duration of the power purchase agreement.

Independent Power Producer Office (IPPO) head Precious Edward also used a virtual briefing on the Gas to Power Independent Power Producer Procurement Programme, or GASIPPPP, to reaffirm government’s commitment to the new bid submission deadline of May 29, 2026 – this, for a programme initially launched on December 14, 2023, with an August 30, 2024, deadline.

Edward said the amendments, which were initially communicated on October 20, had been made following a review of the clarification questions raised by potential bidders in relation to the legal, technical and pricing components included in the initial RFP.

In addition, the change to the load factor, from an initial range of between 25% and 65%, was in line with the recently published Integrated Resource Plan 2025 (IRP 2025), which indicated that the higher load factor would be used for the initial gas projects allocated for entry into the country’s electricity supply by 2030.

The IRP 2025 has allocated 6 000 MW to gas by 2030 and a total of 16 000 MW by 2040; with the initial target appearing highly ambitious when assessed against the timelines outlined by Edward for the first bid window of GASIPPPP, which points to projects entering into commercial operation after 2030.

The IPPO indicated during a virtual briefing on November 26 that it expected to announced preferred bidders three months after the May 29 bid submission deadline.

It had allocated 12 months thereafter to preferred bidders to advance their projects to commercial close and a further three months to reach financial close. The long-stop date for commercial operation, meanwhile, had been set 36 months after commercial close.

Besides changes to the load factor, the revised RFP has also reduce the required yearly minimum start-ups for the generators from 730 to 520, broken into 208 hot starts, 260 warm starts and 52 cold starts “taking into account technical limitations”.

PRICING MECHANISM

Major amendments have also been made to the gas pricing mechanism, which has been aligned to “global liquefied natural gas (LNG) pricing realities”, with the pass-through Fuel Charge Rate in any given month to be determined using a formula based on a proportional split between Henry Hub, Brent and the National Balancing Price that will be applicable to the seller.

A new pass-through Fuel Fixed Cost Charge Rate formula has also been included to explicitly account for transportation and infrastructure costs, including LNG shipping and terminal costs, as well as gas pipeline and liquefaction costs.

Bidders remain responsible for sourcing their fuel and for all supply and delivery risks, but the IPPO believes the updated formulas will help them in managing those risks.

At submission, bidders are required to provide a rand price for producing a megawatt-hour for the plant’s contracted capacity, energy and ancillary services as of the base date of April 1, 2026, and present that price at load factors of 50% and 60%, with an average between the two used for the evaluation. Prices will be indexed to South African and US inflation, and the fuel change rate will be indexed to the movement in the fuel price on a monthly basis.

Bidders still need to secure all necessary environmental approvals and will also be responsible for securing access to the grid, with bid submissions requiring a cost estimate letter from the National Transmission Company South Africa for such connectivity.

Edward said the RFP for the first bid window of the GASIPPPP remained available for access by all prospective bidders, but that further interaction with the IPPO on the RFP would be limited to the publication of briefing notes, with no additional information sharing sessions scheduled.

She also told the more than 450 participants to the virtual event that the last day for bidders to submit written questions would be March 30 next year, while the last day for compulsory registration and payment of the bid submission registration fee was April 15.

The maximum project size remains 1 000 MW, which can be commissioned in phases ahead of the long-stop deadline for commercial operation, and bidders are entitled to participate in more than one bid submission, so long as it is with a consortium that is materially the same.