Anal­y­sis: Min­is­ter’s Eskom sup­port wor­ries IPP

Re­new­able en­ergy coun­cil lashes out at Brown for de­fend­ing util­ity’s re­fusal to sign agree­ments

The Star Early Edition - - NEWS - Siseko Njobeni

THE South African Re­new­able En­ergy Coun­cil (Sarec), which rep­re­sents the re­new­able en­ergy in­dus­try in South Africa, said yes­ter­day that it was wor­ried about Pub­lic En­ter­prises Min­is­ter Lynne Brown’s ap­par­ent sup­port for Eskom’s re­luc­tance to con­nect ad­di­tional re­new­able en­ergy from in­de­pen­dent pro­duc­ers.

Speak­ing at Eskom’s brief­ing on the state of the power sys­tem, Brown – Eskom’s sole share­holder rep­re­sen­ta­tive – weighed in on the stand-off be­tween the power util­ity and the re­new­able en­ergy in­dus­try. She re­it­er­ated Eskom’s con­cerns about the cost of the re­new­able en­ergy power.

She said in­de­pen­dent power pro­duc­ers (IPPs) played an im­por­tant role when South Africa ex­pe­ri­enced power short­ages “but at a pre­mium price”.

Sarec chair­per­son Brenda Martin said yes­ter­day that the or­gan­i­sa­tion was con­cerned about Brown’s ut­ter­ances.

“We are wor­ried about this shift. We have a gov­ern­ment-ini­ti­ated pro­gramme that is based on pol­icy, the En­ergy Act, min­is­te­rial de­ter­mi­na­tions and the Re­new­able En­ergy In­de­pen­dent Power Pro­duc­ers Pro­cure­ment Pro­gramme (REIPPPP).

“At the end of that chain is Eskom. It is clear that Eskom must pur­chase the power. Eskom is now re­fus­ing to com­ply. The lines of ac­count­abil­ity, duty and re­spon­si­bil­ity are clear,” Martin said.

At the cen­tre of the im­passe be­tween Eskom and the re­new­able en­ergy in­dus­try is Eskom’s re­fusal to sign power pur­chase agree­ments with the IPPs as part of the REIPPPP.

She said Eskom’s re­fusal to sign the power pur­chase agree­ments cre­ated un­cer­tainty across the en­tire value chain. “Com­pa­nies want to know what is hap­pen­ing. Peo­ple have in­vested in this sec­tor. I am talk­ing about com­pa­nies across the chain. I am not just talk­ing about in­ter­na­tional com­pa­nies. There are lo­cal com­pa­nies across the value chain.

“It has been 20 months since Eskom was sup­posed to sign the power pur­chase agree­ments,” she said.

Sarec ear­lier this month said it had sought le­gal opin­ion, which it said con­firmed that pre­ferred bid­ders, who are wait­ing for Eskom to sign power pur­chase agree­ments, were en­ti­tled to ap­proach a court to force Eskom to sign.

Martin said the re­new­able en­ergy in­dus­try had been care­ful about fol­low­ing rules in the pre­vi­ous rounds of the REIPPPP.

“The power has been com­ing on stream – so far, 2.7 gi­gawatts, with in­vest­ment stand­ing at R200 bil­lion,” she said.

How­ever, al­though there was no am­bi­gu­ity in the le­gal ad­vice in its pos­ses­sion, Sarec was not keen on a le­gal show­down with Eskom.

“We can­not af­ford to add to the de­lay that we have al­ready ex­pe­ri­enced. We want to re­solve this is­sue,” she said.

But Martin con­firmed that Eskom and the re­new­able en­ergy in­dus­try were not cur­rently in di­rect talks. She said Eskom could not ne­go­ti­ate ex­ist­ing law and pol­icy.

She said the in­dus­try hoped that gov­ern­ment would even­tu­ally tell Eskom “to do what they are sup­posed to do”.

Sarec said min­is­te­rial de­ter­mi­na­tions were bind­ing on Eskom and the power util­ity had no dis­cre­tion to im­pose fur­ther con­di­tions on pre­ferred bid­ders.

Sarec has pre­vi­ously said tam­per­ing with the rules of the REIPPPP “at this stage” would dam­age con­fi­dence in the pro­gramme and the coun­try.

At last week’s World Eco­nomic Fo­rum meet­ing in Davos, Deputy Pres­i­dent Cyril Ramaphosa spoke glow­ingly about the REIPPPP.

PHOTO: SIMPHIWE MBOKAZI

Pub­lic En­ter­prises Min­is­ter Lynne Brown has backed Eskom in its re­fusal to sign power pur­chase agree­ments.

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