- Foreign independent power producer (IPP), Globeleq, and the Ikamva Consortium made up another foreign IPP, Mainstream Renewable Power plus local black economic empowerment partners, Africa Rainbow Energy & Power (AREP) and H1 Holdings, who make up more than 45 % of black ownership, allegedly owe the IPP Office in South Africa around R254.8 million.
Globeleq and its partners in the Ikamva Consortium (the consortium) were named by South Africa’s Department of Minerals, Resources and Energy (DMRE) as Preferred Bidder for twelve (12) of the twenty-five (25) projects, totalling 1274 MW capacity, in South Africa’s Renewable Energy Independent Power Producer Procurement Programme (REIPPPP) Bid Window 5 (BW5). The projects were awarded preferred bidder status in October 2021.
All 12 projects failed to reach commercial close, and the consortium is currently refusing to pay bid bonds for the failed projects. The country’s IPP Office has confirmed that it has called the bid bonds (termination) of the 12 projects. Read more
According to clause 26.1 and 26.2 of the general requirements, rules and provisions (REIPPPP_BW5 RFP_PART A_GENERAL REQUIREMENTS, RULES AND PROVISIONS) the consortium is liable to pay the IPP Office a total of R254.8 million calculated at R200000.00 per megawatt (MW) as a preferred bidder.
The outcome of Bid Window 5 was racked with controversy and allegations of tender rigging emerged. 21 of the 25 preferred bidders announced had the same BBBEE partner in H1 Holdings – Mainstream Renewable Power (12 projects), Scatec (3 projects), EDF (3 projects) and local IPP Red Rocket (3 projects). The majority of the projects that won preferred bidder status were not shovel-ready and had outstanding development works activities including CEL, EIA and other permitting. Only 11 of the 25 projects reached commercial close which raised serious questions over the competency of the IPP Office under the leadership of Bernard Magoro, which at the time fell under the Ministry of Mineral Resources and Energy, headed by Gwede Mantashe.
Related news: Preferred bidders must shoulder the blame for the delay in the financial close of REIPPPP Bid Window 5 projects
Some of the consortiums failed BW 5 projects have allegedly been re-submitted under different names by the MG consortium in REIPPPP Bid Window 7. Read more
AREP and H1 Holdings did not respond to questions by the time this article was published.
Mainstream, who are 75% owned by Norway’s Aker Horizons, offered the following response.
‘Mainstream confirms that none of the R5 projects have been sold.
Mainstream Renewable Power (“Mainstream”) and Globeleq, confirm that demand for payment of the preferred bidder guarantees has been issued in relation to six wind projects and six solar projects which were bid under Round 5 of the Renewable Energy Independent Power Producer Procurement Programme (REIPPPP). Mainstream and Globeleq have applied to interdict payment of the guarantees and a hearing is expected in mid-2025.
Mainstream and Globeleq worked diligently with the Independent Power Producers Office, the Department of Mineral Resources and Energy and Eskom to deliver these projects under Round 5, and due to a range of factors beyond our control, it is regrettable that this objective could not be achieved. All the projects are construction-ready and will support South Africa’s energy transition.’ Ends.
The IPP Office, the body responsible for new generation energy procurement, now falls under the new Ministry of Electricity and Energy headed by Dr Kgosientsho Ramokgopa.
In one of his recent press briefings, Ramokgopa said the pulling of the bid bonds was necessary for the credibility of the REIPPPP programme. “These (bid bonds) are legally binding documents, we are going to pull the bid bonds,” he said, expressing impatience with the fact that contracts were not being honoured. “If we land in court, let’s land in court, we must stick to the rules of this programme,” he added.
Author: Bryan Groenendaal
