The ministers of public enterprises, and mineral resources and energy, convened a meeting on Friday afternoon with independent power producers (IPP) in Pretoria to initiate a renegotiation of power purchase agreements.
The IPPs were asked to come up with proposals and suggestions of how this could be done, said a participant.
Both ministers — Pravin Gordhan and Gwede Mantashe, respectively — have said on several occasions that they would like to renegotiate the tariff of the first two bidding rounds of the renewable IPP programme, as the prices negotiated at the time were expensive relative to the later rounds. Gordhan has said that the cost of the IPPs is a burden on Eskom, which is already under severe financial stress.
But, both IPPs and the investor community have warned that a renegotiation of contracts will undermine investor sentiment and cast doubt on the government’s integrity to honour contractual obligations. The IPP contracts have also been sold on into a secondary market as investments, considered attractive because of their clearly identifiable revenue streams.
The meeting is ongoing. This is a developing story.
Would you like to comment on this article?
Sign up (it's quick and free) or sign in now.
Please read our Comment Policy before commenting.