The signing of the 27, long-delayed independent power producer (IPP) projects is due to receive urgent attention from newly appointed Energy Minister Jeff Radebe, the Department of Energy’s director-general Thabane Zulu said on Tuesday.
Early in February, former public enterprises minister Lynne Brown gave Eskom the go ahead to sign the outstanding power-purchase agreements with IPPs under bid windows 3.5 and 4. However, since then, nothing has taken place.
In reply to questions by members of Parliament’s portfolio committee on energy, Zulu said Radebe would also be asked for guidance on the integrated resource plan (IRP) approved by Cabinet in December, but which has not been gazetted. Zulu assumed the reason why the IRP had not been gazetted was because while Cabinet had approved the plan, it had also raised certain concerns about it that had to be addressed.
According to Zulu, the minister was due to be briefed on Tuesday afternoon on the whole IPP programme, as well as the outstanding unsigned projects. A meeting was also planned with the new Minister of Public Enterprises Pravin Gordhan to discuss the programme.
Zulu insisted there was an in-principle agreement within the government that the outstanding IPP projects had to be signed, but that there had been sticking points, such as financial modeling and the financial impact of the projects on Eskom, which has maintained, for about two years, that it cannot afford them. Zulu did not anticipate the signing of the projects to be a problem.
Programme manager in the IPP office in the Department of Energy Maduna Ngobeni briefed the committee on the IPP programme and warned of the risks of further delays in the finalisation of the 27 unsigned projects. He told MPs that the total infrastructure investment in the 64 signed IPP projects so far amounted to R142bn, but excluded investments of more than R120bn in projects that are, as yet, unsigned or unannounced.
The 64 signed projects are those with a contractual obligation to construct, said Ngobeni, adding that an additional R59.8bn infrastructure investment would be derived from the 27 projects in bid window 3.5 and 4 that have not been signed, as well as from the 20 small projects in the bid window 1 and 2, which are also still to be signed.
The total infrastructure investment from the 19 procured but unannounced projects that would generate 1,775MW in the expedited bid window totaled R63.4bn. Additional investment of R40.4bn would be derived from the two projects under the coal bid window 1, which was also still to be signed.
The 2010 IRP — which has to be updated by the plan adopted by Cabinet in 2017— made provision for the government to procure more than 30GW of energy from IPPs. Ngobeni said most of the determinations for this energy will have to await the finalisation of the latest IRP.
The six bid windows that have already been completed have led to 64 signed projects, of which 62 were operational and generating 3,774MW by end-December 2017. A total of 112 projects have been procured.
The 48 projects that have been procured and announced but not signed will generate 2,421MW.
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