- The Department of Mineral Resources and Energy (the DMRE) announces the postponement of Bid Submission Date for the REIPPPP Bid Window 6.
- The news comes as the Independent Power Producer Office (IPPO) and the DMRE is embroiled in tender rigging allegations associated with the outcome of Bid Window 5 in the South Africa’s Renewable Energy Independent Power Producer Procurement Programme (REIPPPP).
On 25th July 2022 President Ramaphosa announced measures to be taken to address the current energy crisis, which included increasing capacity to be procured under REIPPPP BW 6 from 2600 MW to 5200 MW. In order to ensure compliance with national procurement prescripts, the DMRE has annouced that the new bid submission date for REIPPPP BW 6 will be 22 September 2022.
The Department of Mineral Resources and Energy (DMRE) along with the Independent Power Producer Office (IPPO) is responsible for energy procurement in the country. It is alleged that both entities have violated their own relevant procurement prescripts and criteria. It is also alleged that they have also violated section 217 of the Constitution and are currently being investigated by the country’s Competition Commission.
The outcome of Bid Window 5 reveals several stand out facts which compromise the country’s Competition Act:
- One foreign international independent power producer (IPP), Mainstream Renewable Power, won 12 of the 25 projects.
- 21 of the 25 preferred bidders have the same BBBEE partner in H1 Holdings – Mainstream Renewable Power (12 projects) , Scatec (3 projects) and EDF (3projects) and local IPP Red Rocket (3 projects).
- 21 of the 25 projects were won by foreign-owned IPP’s.
- 15 of the 25 projects were won by Norwegian IPP’s.
- The majority of the projects who won preferred bidder status were not shovel-ready and had outstanding development works activities including CEL, EIA and other permitting. There were over 100 project bids submitted in Bid Window 5. It is alleged that projects were awarded to foreign IPP’s who could not start building where other local IPP’s who submitted shovel ready projects, were overlooked.
- The DMRE/IPPO awarded projects to foreign IPP’s who are unable to meet the criteria set for local content.
The 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.
The IPPO was respected internationally for running four internationally recognised and highly professional Bid Window Auctions from 2011 to 2015.
Since the IPPO was seconded to the Central Energy Fund in 2017 and then purged in 2019 to fall under the Department of Mineral Resources (DMRE), the ability of the country to procure new generation capacity has declined dramatically. Read more
Author: Bryan Groenendaal
