Government commits to R200bn in IPP procurement

2017-02-22 15:39 - Jaco Leuvennink

Cape Town - Government has committed to procure up to R200bn in renewable energy from independent power producers (IPPs).

As at March 2017, exposure to IPPs – which represents the value of signed projects – is expected to amount to R125.8bn. Exposure is expected to decline to R104.1bn in 2019/20.

During 2016/17, contingent liabilities from public private partnerships (PPPs) increased by about R600m, mainly due to the R1.5bn project to construct a new building for Statistics South Africa. Total exposure is expected to decline from R10.9bn in 2016/17 to R7.5bn in 2019/20 as the contract comes to a close.

South Africa subscribes to shares in multilateral institutions such as the International Monetary Fund and the World Bank. Government has an obligation to recapitalise these institutions, in the unlikely event that they run into financial difficulty, by paying for shares that are subscribed but not paid for.

Given that the rand has depreciated less than forecast in the 2016 Budget, provisions for multilateral institutions have declined from a projected R240bn to R218bn for 2016/17. Provisions are expected to increase to R300bn in 2019/20 as South Africa increases its stake in the New Development Bank.

Government’s commitments to the Export Credit Insurance Corporation of South Africa amounted to R16.4bn in 2015/16.

This reflects the net underwriting exposure of the company and its total assets. The contingent liability for post-retirement medical assistance to government employees amounted to R69.9bn.

This reflects the estimated present value of government’s future commitment for state employees. Legal claims against government departments were estimated at R61.4bn.

Obligations for the Road Accident Fund amount to R143.3bn, reflecting the provision on the fund’s books for claims incurred but not yet reported.

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