South Africa’s Public Protector Probes IPP Round 4 PPA Contracts

  • South Africa’s Public Protector, Advocate Busisiwe Mkhwebane is probing allegations of corruption and mismanagement in the awarding of 27 renewable energy projects.
  • The 27 projects were originally awarded to Independent Power Producers under Round 4 in the country’s Renewable Energy Independent Power Producer Program (REIPPP) in 2015 but were delayed by Eskom’s refusal to sign off on the projects.
  • The projects were eventually signed off in March last year by the newly appointed Energy Minister at the time, Jeff Radebe.

In a letter addressed to Eskom board chairperson Jabu Mabuza, which has been leaked to the media, Mkhwebane alerts Mabuza of the probe and requested some documents to be sent to her by 12th August 2019.

In the letter she explains that the agreements do not make sense and the country stands to lose an estimated amount of R1.4 trillion over the power purchase agreement (PPA) term of 20 years. She further points out that the major beneficiaries of the 27 IPPs are South Africa’s leading banks and overseas investors.

The complaint was laid to the Public Protectors office by Phapano Phasha of obscure organisation named the Anti-Poverty Forum (APF).  Phasha raised concerns about the costs to be incurred by the limping Eskom and said there was maladministration and corruption in the process. Phasha further alleges that Eskom executives were put under pressure by their political principals to sign the agreements in April 2018.

Mkhwebane has requested the names, designations and contact details of all the officials of Eskom who were key in the procurement processes leading to the awarding of contracts to the 27 IPPs, as well as the names, designations and contact details of all key officials who represented the IPPs in the contracts concerned.

Mkhwebane also wants all communications regarding the IPPs, submissions and approvals between Eskom and the Departments of Energy and Public Enterprises as well as the National Treasury.

The winners of Round 4 projects were dominated by foreign independent power producers:

  • Italian independent power producer (IPP), Enel Green Power was the biggest project winner by capacity in Round 4 with three wind energy projects totalling 419 MW. Combined with the 513 MW capacities it secured in the third auction, Enel Green Power has a total of 932 MW capacity in South Africa.
  • American company BioTherm Energy secured 3 projects in Round 4 – 2 solar PV projects and one wind energy project. The company will develop a combined capacity of 232 MW.
  • Scatec Solar, a European company based in Norway, secured 3 solar PV projects of 75 MW capacities each.
  • Other foreign companies who were winners in Round 4 include Building Energy (SA) who was awarded a 140 MW wind energy project and SunEdison who was awarded a 75 MW solar PV project.

Link to list of Round 4 project winners.

Among the local beneficiaries of the IPPs contracts was African Rainbow Energy and Power (AREP) which is owned by Patrice Motsepe, the brother-in-law of former energy minister, Jeff Radebe and current South African President, Cyril Ramaphosa. AREP’s portfolio of clean energy projects in South Africa is dominated by solar and wind farm projects where they prefer to take a minority equity stake in projects led by foreign IPP’s. Read more

Related news: Head of South Africa’s IPP office, Karen Breytenbach ask to leave.

The Public Protector in South Africa is one of six independent state institutions set up by the country’s Constitution to support and defend democracy. According to Section 181 of the Constitution: These institutions are independent, and subject only to the Constitution and the law.  Advocate Mkhwebane is under intense scrutiny following court decisions to set aside some of her reports, and calls are mounting for an inquiry into her fitness to hold office. Read more

Author: Bryan Groenendaal

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