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Govt to sign first IPP contracts

Oct 29 2012 14:11 Sapa

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Pretoria - The government is poised to sign its first contracts with independent power producers (IPPs) for the provision of 1 400 megawatts of renewable energy.

Briefing the media in Pretoria on Monday, Energy Minister Dipuo Peters said the contracts - with 28 preferred bidders - would be signed on November 5 and 6.

"Today, I am pleased to announce... that South Africa is ready to conclude about R47bn in renewable power generation through Window 1 preferred bidders."

Window 1 was the first round of bids sought in terms of the government's 20-year Integrated Resource Plan's renewables programme, which includes solar, wind, biomass and biogas projects.

Peters said next Monday's signing ceremony was only the beginning.

"By March (next year), we expect another R28bn of investment as we close the second window."

The investments would create jobs, especially in rural areas where the renewable power plants were located.

Peters warned of "harsh" penalties should the bidders fail to honour their contractual agreements.

She apologised for delays in reaching financial close on the first round of bids - supposed to have been done in June this year - saying this was "largely related to government approvals". The 28 companies were appointed as preferred bidders in December last year.

In a statement earlier this year, the department said it estimated that the full five-window bid process "will attract project proposals to the value of R100bn over its lifetime".

Earlier this month, power utility Eskom applied for a 16% annual increase for five years in the price of electricity - from April next year, to March 2018. A portion of this (3%) is to support the introduction of IPPs.

Next week's signing will see the department entering into implementation and direct agreements with each bidder, while Eskom will sign a power purchase agreement with each of them.

 
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