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- South Africa’s Independent Power Producer Office (IPPO), the office responsible for the management of the country’s Renewable Energy Independent Power Producer Procurement Programme (REIPPPP), has confirmed that it has called the bid bonds (termination) for fourteen projects which failed to reach commercial close in Bid Window 5 of REIPPPP.
- The projects were awarded preferrred bidder status in October 2021.
- The money called in eached failed bid was not revealed.
The head of the IPP Office, Bernard Magoro, made the announcement to parliament during a presentation to the Portfolio Committee on Electricity and Energy yesterday. Magoro explained that only 11 (totalling 1159MW) of the 25 projects selected as preferred bids during BW5 had achieved commercial close.
“Fourteen of the projects did not reach financial close. The department has already terminated their preferred-bidder status and we have subsequently called the bid bonds on these 14 projects,” Magoro said. One bidder he said (believed to be Total Mulilo Du Plessis PV) has agreed to pay.
Related news: IPP’s must shoulder blame for delayed outcome in REIPPPP Bid Window 5
Bid Window 5 raised allegations of bid rigging where one IPP, Globeleq-Mainstream SA Renewables Power (Mainstream), won no less than 12 of the 25 projects awarded preferred bidders status. All 12 projects have failed to reach commercial close. Mainstream are contesting payment of the bid binds for each of their 12 projects. Engie-Pele Sannapos Solar PV Consortium are also allegedly contesting payment of their bid bond.
The IPP Office has been criticised for incompetence and a lack of capacity to understand wind and solar project financial modelling. They have appointed preferred bidders with projects that are not bankable. This has resulted in multiple financial close deadline extensions and failure of much needed new generation capacity to come online. Read more
At the briefing, Magoro also confirmed the termination the five projects in the RMIPPPP, including the Karpowership projects, which did not achieve financial close under the risk-mitigation programme and that government had “retained the preferred bidder guarantees”.
Related news: Mainstream’s CEO Eddie O’Conner resigns after making deplorable comments about the African renewable energy sector
In one of his recent press briefings, the country’s Electricity and Energy Minister, Dr Kgosientsho Ramokgopa, said the pulling of the bid bonds was necessary for the credibility of the 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
