Operational Instability at South Africa’s IPP Office

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  • The recent shockwave sent through South Africa’s IPP industry on Monday, of pioneer Karen Breytenbach having to leave her position at the IPP Office, has been officially announced by the Department of Energy through a formal statement.

As Chair of the Joint Implementation Committee, the Department of Energy has noted that it was unsuccessful in resolving operational instability caused at the IPP Office, and therefore decided that the current situation was untenable, and agreed on the need for urgent action to be taken.

With nine months left on her contract at the IPP Office, Breytenbach told Bloomberg reporters that “there was no reason” for early termination. “They want to appoint someone else,” she said.

According to the DoE, this decision is taken approximately five months after the expiry of the contract of the Head of IPP Office.

Since the expiry of the contract, it has become clear to the Department that it is not possible to resolve the appointment of the Head of the IPP Office under the current circumstances.

It should be noted that this JIC meeting was preceded by numerous attempts by the Department to find a resolution on the matter, including but not limited to attempts to contract the IPP Office Head directly. These attempts have not yielded a positive outcome.

The statement said the Department is committed to creating stability at the IPP Office and to support the transitioning of the office into an institution established through legislation.

“We envisage to have a newly established institution that will have its own governance structure, in accordance with the Public Finance Management Act (PFMA) and other applicable legislation to institutions of a similar nature,” the DoE said in a statement.

The IPP Office continues to play an important role in providing process certainty for private funding to enter power generation market, therefore it is important that our decision to stabilise operations and to strengthen governance is communicated effectively.

About the JIC

The Independent Power Producers Office (IPPO) was established in 2010 through a three-party Memorandum of Agreement (MoA) between the Department of Energy, National Treasury, and the Development Bank of Southern Africa.

Clause 10 of the MoA established a Joint Implementation Committee (JIC) and mandated it to oversee governance matters relating to the Office. Each party is represented in the JIC.

It is important to note that the JIC meetings are constituted as per agreement among the parties.

Author: Ashley Theron

This article was originally published on ESI Africa and is republished with permission with minor editorial changes.


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