- The Mainstream/Globeleq (MG) consortium refuses to pay bid bonds for 12 projects that failed to close commercially in South Renewable Energy Independent Power Producer Procurement Programme (REIPPPP) Bid Window 5.
- The country’s IPP Office has confirmed that it has called the bid bonds (termination) of the 12 projects plus two more which failed to reach commercial close.
- The projects were awarded preferred bidder status in October 2021.
- Some of the failed projects have allegedly re-emerged under different project names in REIPPPP Bid Window 7.
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.
Mr Tshifhiwa Bernard Magoro is head of the Independent Power Producer Office in South Africa. Image credit: IPPO
Related news: Preferred bidders must shoulder the blame for the delay in the financial close of REIPPPP Bid Window 5 projects
Some of the 12 failed MG consortium BW 5 projects have allegedly been re-submitted under different names by the MG consortium in REIPPPP Bid Window 7.
The following projects may be under scrutiny by the IPP Office, the body responsible for new generation energy procurement, which now falls under the new Ministry of Electricity and Energy headed by Dr Kgosientsho Ramokgopa.
Re-submitted wind projects which may be subject to bid bonds
The MG consortium developed 3 x 140MW wind projects as a cluster in Sutherland namely, Sutherland Wind Farm (“Sutherland 1”), Sutherland 2 Wind Farm (“Sutherland 2”) and Rietrug Wind Farm (“Rietrug”). Sutherland 1 and Rietrug’s bid reached preferred bidder status in BW5. Sutherland 2 signed a PPA with SASOL. All 3 projects failed commercially and PPAs were cancelled.
The MG consortium is now allegedly bidding them in BW7 as follows: Klipkoppie 240MW has been bid under project company Sutherland Wind Farm (Pty) Ltd with company registration number K2019486607. Klipkoppie is basically Sutherland 1 and Rietrug merged and bid as one 240MW project. Sutherland 2 is now bid as Salsola 140MW.
Re-submitted solar projects which may be subject to bid bonds
The MG consortium also developed the Kentani Solar Cluster in Dealesville which they bid and won 6 projects in BW 5 namely, 75MW Kentani Solar Facility (“Kentani”), 100MW Klipfontein PV1 Solar Facility (“Klipfontein”), 75MW Klipfontein PV2 Solar Facility (“Klipfontein 2”), 100MW Leliehoek Solar Facility (“Leleihoek”), 100MW Braklaagte-Braambosch Solar Facility (“Braklaagte”) and 75MW Sonoblomo Solar Facility (“Sonoblomo”).
The MG consortium is now bidding some of the failed solar projects combined with others in the form of two bids namely; the 220MW Junonia bid under Irene PV Facility (Pty) Ltd which is allegedly a combination of Irene and other projects in the cluster to reach the bid capacity and, the 170MW Taracus bid under Boschrand 2 PV Facility (Pty) Ltd which is allegedly a combination of Boschrand 2 and other projects in the cluster to reach the bid capacity.
Link to the full list of REIPPPP Bid Window 7 Bidders List HERE.
When is it acceptable?
If an independent power producer is not awarded preferred bidder status in one REIPPPP Bid Window, it is acceptable for them to re-submit the same project in a following bid window. However, the IPP Office could now be facing a situation where failed projects are being re-bided in new rounds under new names and possible revised ownership profiles, while at the same time, the independent power producer responsible for the failed projects is contesting payment of the bid bond penalty for a previous window.
The Minister of Electricity and Energy, Dr Kgosientsho Ramokgopa, did not respond to questions on the matter.
The MG consortium did not confirm or deny their participation in BW 7 with versions of failed BW 5 projects. They submitted the following response to questions :
‘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 of the projects are construction-ready and will support South Africa’s energy transition.
Mainstream and Globeleq have successfully delivered hundreds of megawatts of projects under the REIPPPP over the last 15 years and are fully committed to contributing positively to the South African energy sector going forward via REIPPPP as well as through the private sector.’ Ends.
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
