Power utility Eskom yesterday concluded a deal with a BEE contractor to supply power to one of Africa’s largest timber processing plants under development near Ugie.

The deal is seen as firm commitment from the electricity provider to deliver on a R35 million contract with Steinhoff/PG Bison, one of Europe’s top five furniture groups, and Africa’s largest, to supply power to the plant.

“Eskom are proving they have the wherewithal to deliver what we have ordered and we are here to celebrate that,” said PG Bison company secretary, Mike Dalrymple, from East London yesterday.

Local BEE company, Consolidated Power Projects, was awarded a R22,6m contract to construct a 66km132kV powerline between Ugie and Qumbu.

It is the largest of several contracts that together will provide sufficient power to the timber plant. Consolidated has previously completed two similar projects for Eskom.

Dalrymple said it was critical to have secured a reliable source of power before starting construction on the R1,3 billion plant. Earthworks have begun and the plant is expected to open in May 2008.

The project has been fêted as the largest financial injection into the north-eastern region of the Eastern Cape. Dalrymple said the factory would provide 3000 direct jobs, with significant spin-off for the surrounding economy.

The deal between government and the Steinhoff/PG Bison group was nurtured by Premier Nosimo Balindlela and Eastern Cape Development Corporation executives, and confirmed in Bhisho earlier this year.

At the time, Border-Kei Chamber of Business chairperson Les Holbrook welcomed the development and said it would boost various related industries such as forestry, saw-milling, transport and logistics.

It would go a long way to creating greater economic diversification in an area where unemployment was acute and farming and basic trading were the economic core, he said.

The factory site is 5kms from Ugie on the Maclear road and will centre around two plants producing raw board and more refined melamine faced board. Together they will be capable of producing more than 60km of board, one-metre wide, everyday.

Yesterday Dalrymple said the company would import the new plant equipment from Germany.

In total, the government has committed more than R56m in critical infrastructure such as powerlines, water and sanitation to the development.

The factory will be supplied with timber from the company’s own forests nearby.

At the end of last year, the Steinhoff group acquired a 67 percent interest in the North Eastern Cape Forests Joint Venture from Mondi. Steinhoff assumed management of the venture from February this year.