The Black Energy Professionals Association welcomes the announcement by the Minister of Mineral Resources and Energy, Honourable Gwede Mantashe, to add 2600MW of renewable energy to generation capacity by awarding the preferred bidder status to 25 bidders for Round 5 of the Renewable Energy Independent Power Producer’s Programme (REIPPPP).
This addition represents an estimated R50 billion in renewable energy investment that is scheduled to be commissioned from Q2 of 2024. BEPA would also like to take the opportunity to congratulate all successful bidders on being awarded preferred bidder status. This comes amid rolling blackouts which the country can ill-afford, the most recent of which culminated in a public briefing held by Public Enterprises Minister, Honourable Pravin Gordhan, emphasizing the sluggish pace with which the country is procuring the additional 6000MW of required generation capacity to stabilize our supply.
While additional generation capacity will assist in addressing the situation in the medium-term, it remains a concern that the shortfall in capacity has not been more decisively addressed by having procured more bids during the bidding window for Round 5, particularly to predominantly local and more specifically, wholly black-owned bidders. Of even greater concern is the composition of the 25 bids. While widely acknowledged as the cheapest round of IPP renewable energy procurement to date, BEPA highlights that though these bids include elements of local equity, for the most part they have no fully South African bidder that was awarded successful bidder status. Seemingly, predominantly foreign companies are at the helm of the successful bidders in the guise of foreign direct investment.
The reality is that the overwhelming quantum of funding to finance these projects will come from South African institutions. With government guarantees in place, these bidders will have the benefit not only of local funding, but will relocate their profits to tax havens abroad which could result in a loss to the fiscus. BEPA calls on the Minister of Mineral Resources and Energy and the South African government to seriously consider the upcoming Bid Window 6 being dedicated to South African companies, and that future bid windows ensure significant local contents to realize green job creation and SMME industry growth. South Africa has, after all, developed sufficient capacity to develop and manage its own energy resources since the inception of the REIPPPP.
Furthermore, there is a need to accelerate and expedite the procurement of additional capacity from other globally viable energy sources including gas, nuclear and battery storage to ensure that stability is brought to Eskom’s generating capacity.
BEPA also calls on the successful bidders to ensure that they do not only meet local contents, equity and employment creation targets in a once-off fashion but that they also implement clear plans of sustainable clean energy job creation and skills transfer to build a strong base of local capacity in this regard. BEPA encourages the main beneficiaries of this REIPPPPP round to intentionally transform with the aim of improving on their enterprise and community development initiatives. BEPA and its members are open for engagements on how this can be done.
Prepared by Mr. Ricardo Hansby and Mr. Nkosinathi Hlophe on behalf of BEPA.
Date: 29 October 2021.