DMRE Denies Tender Rigging Allegations in Renewable Energy IPP Procurement Programme Bid Window 5

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  • The Department of Mineral Resources and Energy (DMRE) has noted inaccurate and malicious reporting by Green Building Africa Publication with regard to its Renewable Energy Independent Power Producer Procurement Programme (REIPPPP) Bid Window 5 in recent weeks.
  • With over 150000 followers, Green Building Africa is the leading B to B digital news site servicing the renewable energy, building and infrastructure sectors on the African continent.

In articles published on 10 February 2022, and on 9, 15, 19 and recently 31 August 2022, Mr Bryan Groenendaal, in his capacity as Editor of the on-line Green Building Africa publication, has made baseless allegations regarding the outcome of the REIPPPP Bid Window 5 tender process.  In particular, Mr Groenendaal has alleged that the outcome of REIPPPP BW 5 was rigged. Link to article here. 

The Department and the IPP Office strongly refute with the contempt it deserves the allegations and statements published by Mr Groenendaal, and takes the allegations raised very seriously.

The Department has on previous enquiries by Mr Groenendaal, advised that he reports such alleged irregularities to the law enforcement agencies, as this is the appropriate step to be taken in terms of the Prevention and Combating of Corrupt Activities Act 12 of 2004.

The Department would like to assure investors and the public at large that the IPP procurement process is concluded strictly in line with applicable procurement rules and the Constitutional principles applicable to public procurement, being Fairness, Openness, Transparency, Competitiveness and Cost-Effectiveness.

Background to the REIPPPP Bid Window 5

The 5th Bid Window under the Renewable Energy IPP Procurement Programme (REIPPPP BW 5) was launched on 12 April 2021. The 25 Preferred Bidders announced by the Department on the 28th October 2021 were appointed as an outcome of the above procurement process conducted in accordance with the Constitutional principles. The total new contracted capacity will be 2583 MW, of which 1608 MW will be procured from 12 Wind projects, and 975 MW from 13 Solar PV projects. These projects are expected to attract over R50 billion in investment and will create around 14 000 new jobs during construction and operations of the renewable power plants. The projects are expected to reach commercial operation within 24 months from commercial close.

Setting the record straight

The outcome Bid Window 5 reveals a number of standout red alerts:

  • One international IPP, Mainstream Renewable Power, won 12 of the 25 projects
  • 21 of the 25 preferred bidders have the same BBBEE partner in H1 HoldingsMainstream RenewablePower (12 projects), Scatec (3 projects) and EDF (3 projects) and local IPP Red Rocket (3 projects). The underlying principle of B-BBEE is to spread wealth sustainably and as far as possible, to the previously disadvantaged.
  • 21 of the 25 projects were won by foreign-owned IPP’s.
  • 15 of the 25 projects were won by Norwegian IPP’s.
  • The tariffs bided were unsustainably low and not The average weighted price bid for solar comes in at (R) 42.9c kW/h while the average bid for wind is (R) 49.5c kW/h. Industry experts claim that the winning tariffs are too low to be realistic and may be sponsored. Read more
  • The majority of the projects who won preferred bidder status were not shovel-ready and had outstanding development works activities including CEL, EIA and other permitting.
  • The criteria set for local content are unrealistic and cannot be
  • The increase in the cost of components like wind turbines, inverters and solar panels during the extended delay has found winning bidders with ‘stranded’ financial models that may not be bank presentable.

We have published a series of opinion articles on the controversy, link, link and link. 

This publication was referred to two individuals at the Independent Power Producer Office by the DMRE on 27th July 2022. We sent no less than 18 questions to the two individuals on the same day and to date, we have not received a response to any of them.

On 30th July 2022, the DMRE responded as follows ‘the Department of Mineral Resources and Energy is of the view that the allegations made in your email are extremely serious and should be reported to law enforcement. We would appreciate it if you can share who has made such allegations.’

The allegations have been reported to the country’s Special Investigations Unit. The Competition Commission is also investigation whether the DMRE/IPPO violated their own procurement prescripts, including section 217 of the Constitution.

Author: Bryan Groenendaal


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