THE Cabinet has approved the building of a third coal-fired power station by Eskom, although no timeline, schedules or costs have yet been approved, Trade and Industry Minister Rob Davies said on Thursday.

Speaking during a post-Cabinet media briefing, Mr Davies said construction of the power station, dubbed Coal 3, was likely to start once Eskom’s two current coal-fired projects, Medupi and Kusile, were complete.

The national power utility is spending about R240bn on those two power stations — the lion’s share of a R300bn budget to expand its generation capacity over the next 10 years. Both stations are now delayed by three years from the initial April 2011 commissioning date.

He said this was part of the government’s overall strategy to ease energy constraints on the economy.

"We must work with stakeholders to commence the financing and the procurement arrangements for Coal 3," Mr Davies said. "We must also work to unblock the various decisions necessary for co-generation projects."

The minister also announced that the government was finalising the authorisation of shale-gas exploration in a responsible and environmentally friendly manner.

"The fortunes of the US have turned around on the basis of reindustrialisation based on energy self-sufficiency driven by the use of shale gas," he said.

"What we are saying here is that we need to take a clear decision to authorise the exploration of shale gas.

"We (the government) haven’t done the physical exploration.... We are committed to the use of the resource in an environmentally responsible way, but we need to take a decision on the exploration."

A third energy announcement was that the government would encourage projects to enhance regional hydro-power capacity and enter into carefully considered contracts to import energy from the region.

Mr Davies cited an Industrial Development Corporation study on how to import energy from the Grand Inga proposed hydro-electric project in the Democratic Republic of the Congo and gas and oil from neighbouring countries.

He said the government also wanted to speed up the introduction of biofuels.

"Biofuels have the potential to unblock tens of thousands of jobs and add half a percentage (point) to gross domestic product," he said.

"There are some outstanding issues around the mandatory blending regulations and the incentive, and we are setting ourselves timetables to solve this."

© BDlive 2013