Bid to stop IPP fails
FUTILE: MCHUNU WANTS FIRM TO STOP OPERATIONS AT CLANWILLIAM DAM
Company has a Nersa licence to run hydropower plant.
Ahigh court application by Water and Sanitation Minister Senzo Mchunu to stop the operations of an independent power producer (IPP) at Clanwilliam Dam has been dismissed with costs because of false testimony by the department’s chief director of engineering services.
Clackson Power holds a National Energy Regulations of South Africa (Nersa) licence for the operation of the hydropower plant at the dam, which is valid until the end of March 2028.
In terms of a power purchase agreement (PPA) concluded with the Cederberg municipality in May 1998, Clackson Power sells all power generated by the power station to them.
Clackson Power also concluded an operations agreement with the department of water and sanitation (DWS) on 17 April, 2001 to operate the plant.
DWS has approved and embarked on a project to raise the dam wall by 13 metres, which will increase its yield by about 70 million cubic metres a year to augment water supplies to the Olifants River Irrigation Scheme, and assist the development of resources for poor farmers.
Work to improve the dam’s safety is also required, which involve major construction works.
Mchunu’s founding papers said the project required the termination of the operations agreement with Clackson Power, which resulted in the DWS addressing correspondence to Clackson Power terminating the agreement effective from 28 February, 2022.
Follow-up letters were sent to Clackson Power, the most recent dated 13 September, 2022, which again requested it to cease the power station operations and remove all the machinery from the site within 14 days.
Clackson Power replied in a letter dated 19 September, 2022 denying DWS’ competence to terminate the operating agreement, and refused to vacate the property, leading to these court proceedings.
The operating agreement did not contain any provision related to its termination.
Mchunu claimed it was a contract of unspecified duration, and it was therefore a question of interpretation to ascertain what the intention of the parties was regarding termination.
He said the agreement contains no indication the parties intended to be bound in perpetuity and, on a proper interpretation, a tacit term must be imported into the agreement to the effect that it would be terminable on reasonable notice by either party.
Mchunu claimed reasonable notice of termination was given, the agreement had accordingly been lawfully terminated, and the DWS, as the property owner, was entitled to obtain an order that Clackson Power cease its operations and vacate the property.
Clackson Power opposed the application, and claimed the minister’s deponent “lacks the necessary authority to bring this application or depose the affidavit on behalf of the applicant (Mchunu)”. It further said:
Clackson Power has a Nersa licence, and authorises it to operate the hydropower plant and sell electricity to the municipality as well as four other clients;
Clackson Power has a right to occupy the property and possess the land based on an agreement of servitude dated 31 March, 1998, the contract of sale between it and the municipality dated 27 February, 1998, the PPA dated 8 December, 2011, and the operating agreement dated 17 April, 2001;
An “arrangement” has been reached that DWS’ construction works will be managed in such a way that Clackson Power will be able to proceed with its business with minimal interruption; and
The DWS’ intended construction works are unlawful.
In a judgment handed down on Wednesday, Judge DC Joubert only dealt with the issue of the authority of Mchunu’s deponent, Aloious Muwengwa Chaminuka.
Joubert said Chaminuka, in his founding affidavit, stated that he is “an adult male director-general of the department of water and sanitation” and “I am duly authorised to depose to this affidavit and to institute the current application on behalf of the department”.
The judge said Clackson Power denied that Chaminuka was the director-general of the DWS, adding that it was public knowledge that this position is held by Dr Sean Phillips.
Joubert said Clackson Power further pointed out it appeared from one of the documents annexed to Mchunu’s own founding papers that Chaminuka is actually the “chief director: engineering services”, which disproves the statement he made under oath in his founding papers and “also shows that [Chaminuka] was not clothed with the necessary authority to bring the application on behalf of the minister or to depose to the affidavit”.