Logistics service
providers that have
invested heavily
in new equipment
in anticipation of new
business opportunities
around government’s
ambitious Renewable Energy
Independent Power Producer
Procurement Programme
(REIPPPP) have to wait even
longer for the contracts to come
through. The programme is
now 18 months behind schedule
and remains at an impasse.
Mike Peo, head of
infrastructure, energy and
telecommunications for
Nedbank Corporate and
Investment Banking, said
that the Independent Power
Producer Procurement (IPP)
office had granted up to five
extensions on the signing of
power procurement agreements
(PPAs) with 37 renewable
energy producers.
“Delays in the
programme are
costly on a
number
of levels
– investor
confidence,
job creation,
localisation and
BEE participation, to
name but a few,” he said,
adding that this had affected
confidence from both local and
international funders.
“We are sitting at an
impasse, with Eskom and the
Department of Energy not
committing to
a timeline for
the completion
of these
projects,” Peo
pointed out.
“In the current
[energy]
oversupply
scenario,
Eskom
maintains
that it cannot
afford to buy
the power, but
the private
sector view
is that there
is a contractual obligation to
complete the Round 4 projects.”
Nedbank provides project
finance to IPPs under
the REIPPPP, and has
approximately 42%
market share across
the renewable
energy
subsector.
But given
the ongoing
political volatility,
coupled with policy
uncertainty around the future
rollout and framework for
renewables, Peo has warned
that foreign capital may be
withdrawn from the sector.
The South African
Renewable Energy Council
(Sarec)
highlighted
earlier this year
that a total
of R58.5bn
worth of
investment and
about 13 000
construction
jobs depended
on these
agreements.
The latest
Fieldstone
Africa
Renewable
Index –
released
in March this year by the
independent investment bank
and financial service provider
in energy and infrastructure
in Africa – showed that
South Africa had
fallen off the top of
the Big Five list
and was stuck
in a category
of its own,
called “(Fitfully)
Waking Giant”.
Jason Harlan,
CEO of Fieldstone
Africa, said South Africa
was by far the country with
the most potential but that
its reputation and position on
the index had begun to slip
due to a refusal by Eskom to
sign the PPAs.
Eskom spokesperson
Khulu Phasiwe told FTW
that the power utility was
awaiting a further directive
from government. “We are
agreed, in principle, that the
37 outstanding PPAs will
be signed but our biggest
issue is the scale and pace of
rolling out these projects,”
he said.
Phasiwe pointed out that
South Africa’s energy supply
was no longer as constrained
as it had been when the
programme was launched.
“The Minister of Energy,
Mmamoloko Kubayi, is still
consulting with the Minister
of Public Enterprises, Lynne
Brown, to devise the right
strategy going forward.”
Meanwhile, spokesperson
for the National Energy
Regulator of South Africa
(Nersa), Charles Hlebela, has
confirmed that its electricity
sub-sector will soon launch
a formal investigation into
the delay around the signing
of PPAs.
This in response to a
formal complaint by the
South African Wind Energy
Association (SAWEA) about
Eskom’s lack of response
relating to a directive for it
to sign the PPAs from the
ex-minister of energy, Tina
Joemat-Petersson.
“Nersa has appointed
someone to head up the
task team and we hope to
formally launch the probe
very soon,” he told FTW.
Delays in the
programme are costly
on a number of levels
— investor confidence,
job creation,
localisation and BEE
participation.
– Mike Peo
