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Sasol puts Project Mafutha on hold

Publish date: 21 September 2010
Issue Number: 181
Diary: Legalbrief Environmental
Category: Energy

Sasol announced last week that it is putting its plans to turn coal into fuel in the Waterberg on hold, says a Cape Times report.

It said it was delaying the progression of Project Mafutha to the feasibility phase due to the lack of clarity about large-scale coal gasification tests, as well as the provision of a commercially viable carbon capture and storage (CCS) solution. It said more certainty was also required about the government's prioritisation of SA's mega energy projects, and this was expected towards the end of the year. Because of its potential for heavy carbon emissions, Mafutha would need to integrate CCS at the outset. But the technology is expensive, while carbon sequestration options in SA are unclear. Sasol CEO Pat Davies has indicated the project would require extensive government support via a public-private partnership. Full Cape Times report (subscription needed)

And, Energy Minister Dipuo Peters has launched the atlas on geological storage of carbon dioxide, inching the country closer to realising its carbon capture and storage potential, reports Business Day. The continued dependence on fossil fuels makes carbon capture and storage an important intervention in addressing climate change. The map launched last week is an important step towards identifying potential carbon capture and storage sites in SA, the report says. It follows last year's establishment of the National Centre for Carbon Capture and Storage. Full Business Day report

The government has refused to approve PetroSA's application to create an off-loading facility for huge liquefied natural gas (LNG) carriers offshore of Vleesbaai in the Cape, says a Cape Argus report. Last week, the national Department of Environmental Affairs rejected the parastatal's final scoping report on the proposed project. Vleesbaai residents say LNG is the second-most explosive substance in the world and, because the proposed project would involve having a 300m-long LNG carrier permanently at anchor at a loading buoy just off the coast, the village would be at risk. PetroSA announced in March that its negotiations with an LNG supplier for the proposed project had fallen through. It said it would not be proceeding with the EIA process beyond seeking approval for the scoping report and for its 'plan of study', which would have been the next statutory step. Full Cape Argus report (subscription needed)

The Cogeneration World Africa 2010 conference was held in Johannesburg last week, notes a Cape Times report. Here, Public Enterprises Minister Barbara Hogan said that cogeneration will feature strongly in the 2010 integrated resource plan (IRP) under development by the government. Thus far, six independent power producers (IPPs) have signed off take agreements for 380 MW under Eskom's medium-term power purchase programme while being granted generation licences by the National Energy Regulator of SA. They include JSE-listed Ipsa, petrochemicals group Sasol and pulp and paper group Sappi. However, the licensees' combined initial contribution to the national grid is a fraction of what is required to boost SA's electricity reserve margin, and the cogeneration programme will have to be stepped up considerably. The energy regulator is understood to be compiling a process for cogeneration feed-in tariffs, similar to the renewable energy feed-in tariffs designed to incentivise investment by topping up prices, the report notes. Full Cape Times report (subscription needed)

Eskom's planned solar farm in Upington could cost up to R150bn and would need a huge private capital injection, government spokesperson Themba Maseko said. A report in The Times quotes Maseko as saying a site had been identified in the Northern Cape town and a feasibility study could be concluded by the end of the month, paving the way for an investors' summit to test private interest in the project. 'At this stage the feasibility is not yet complete,' Maseko told a media briefing on Cabinet's regular fortnightly meeting. Maseko said a final report could be ready at the end of September. The Upington solar power project and a wind farm at Sere, some 160km north of Cape Town, had been lying dormant for lack of funding. But, the report notes, the two projects received nearly R2bn in International Bank for Reconstruction and Development funding as part of the R3.75bn US World Bank loan to Eskom approved earlier this year, putting both back on the drawing board. Full report in The Times