South Africa: Mantashe to Officiate the Signing of PPA’s in 2000MW Risk Mitigation IPP Procurement Programme

News Flash

• South Africa’s Minister of Mineral Resources and Energy, Mr Gwede Mantashe will on Thursday, 02 June 2022, officiate the signing of power purchase agreements in respect of the 2000MW Risk Mitigation Independent Power Producer Procurement Programme (RMIPPPP) in Centurion.
• No further information has been provided by the ministry on which projects have reached financial close. 
• The eleven projects awarded preferred bidder status outcome included three gas powership projects totalling 1220MW submitted by Turkish owned independent power producer Karpowership SA.
• The other eight power generation projects are made up of hybrid systems which include solar PV, wind and energy storage technology. 

The programme has faced extended delays and much controversy

The original deadline of 31^st July 2021 was set for independent power producers (IPP’s) appointed as preferred bidders, to reach financial close for their projects in South Africa’s Risk Mitigation Independent Power Producer Procurement Programme (RMIPPPP). It was extended by two months to 30^{th September and then extended again to 31st March 2022. The latest notice on the IPP Projects website communicates an extension to end of April – “a date of which will be confirmed in due course’.} 

In March 2021 eight preferred bidders totalling 1845MW and a further 3 eligible bids totalling 150MW were announced. 

The eleven projects awarded preferred bidder status outcome included three gas powership projects totalling 1220MW submitted by Turkish owned independent power producer Karpowership SA. The other eight power generation projects are made up of hybrid systems which include solar PV, wind and energy storage technology. The prices for the proposed solutions range from R1 468 per MWh to R1 885 per MWh. The weighted average price is R1 575 per MWh.

Related news: The Organisation Undoing Tax Abuse (OUTA) has filed an application for the review and setting aside of the decisions by the National Energy Regulator of South Africa (NERSA) to grant the three Karpowership independent power producer (IPP) generation licences. 

South Africa’s Department of Forestry, Fisheries and the Environment refused all three of Karpowership’s environmental impact assessment applications citing incomplete submissions. This prompted the Green Scorpions to recommend criminal charges for earlier attempts by Karpowership SA to bypass environmental regulations. Read more

The eleven projects are projected to inject a total private sector investment amount of R45 billion to the South African economy, with an average local content of 50% during the construction period. South African entity participation from these projects is 51% with black ownership at 41%.

Around 3 800 job opportunities will be created during the 18 months construction period and a further 13 500 during the 20-year Power Purchase Agreement (PPA) term.

The objective of the RMIPPPP was to fill the current short-term supply gap, alleviate the current electricity supply constraints and reduce the extensive utilisation of diesel-based peaking electrical generators. The Determination for the RMIPPPP was gazetted on the 7th of July 2020.

Related news: The Karpowership SA bid has been riddled with controversy plus allegations of tender rigging

Author: Bryan Groenendaal