South Africa’s RMIPPPP Fiasco Continues – Will Mantashe Survive?

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  • The deadline of 31st July 2021 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), has been extended by two months to 30th September. 
  • South Africa’s Department of Mineral Resources and Energy (DMRE), headed by Mr Gwede Mantashe, informed the preferred bidders directly on 29th July, without an official press release.

The move raises questions on whether Matashe is ‘accommodating’ controversial Karpowership SA, a preferred bidder for three gas-to-power projects totalling 1220 MW valued at R225 billion, or whether the other preferred bidders, who have submitted ambitious renewable energy hybrid projects, have struggled to reach financial close in the prescribed deadline.

The Karpowership SA bid has been riddled with controversy plus allegations of tender rigging. Read more

In June this year, 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

In addition, the local content designated by the Department of Trade and Industry (DTI) for  plant and components procured under the RMIPPPP is proving to be significantly unrealistic.

Local and sole solar panel frame supplier, Hulamin, has closed its aluminium extrusion and anodizing lines used to manufacture the frames forcing preferred bidders to look at full import of frames or entire modules. Under these circumstances, 65% local content criteria imposed by the DTI for the aluminium frames cannot be met.

Similarly, 40% local content is required for inverter suppliers under the RMIPPPP. The only reputable inverter manufacture who qualifies under this criteria is Italy’s Enertronica Santerno, who have invested in a local inverter manufacturing plant. Read more

South Africa desperately needs new generation capacity. The country is plagued with regular bouts of load-shedding. Eskom, the countries energy utility, recently implemented another bout of load-shedding citing breakdowns totalling 14137MW while planned maintenance is 2 924MW of capacity. Read more

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.

It is now increasingly obvious that preferred bidders are not going to connect power to the grid by June 2022 as required.

There is growing public pressure on President Cyril Ramaphosa to make changes to his government. On the weekend, speaking to the press, he himself has said ‘watch this space’. Against the background of the RMIPPPP fiasco, will Gwede Mantashe survive the impending cull of non performing ministers?

Author: Bryan Groenendaal


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