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South Africa won’t change IPP course ‘midstream’

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South Africa won’t change IPP course ‘midstream’

Minister in The Presidency for Performance Monitoring and Evaluation Jeff Radebe on South Africa's commitment to the IPP programme. Camera Work & Editing: Nicholas Boyd. Recorded: 22.8.2016

22nd August 2016

By: Terence Creamer
Creamer Media Editor

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Cabinet appears to have put paid to Eskom efforts to halt the country’s highly regarded independent power producer (IPP) programme, with Minister in The Presidency for Performance Monitoring and Evaluation Jeff Radebe indicating on Monday that there was no intention to “change course midstream”.

Speaking in Pretoria at a briefing on the Cabinet lekgotla, which took place at the Sefako Makgatho Presidential Guesthouse from August 16 to 19, Radebe endorsed an August 17 statement by Energy Minister Tina Joemat-Pettersson, in which she reiterated that South Africa was pursuing a “diversified energy mix” which would include IPPs and the new nuclear build programme.

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Her statement followed revelations that Eskom chairperson Dr Ben Ngubane wrote her a letter indicating that the State-owned utility was unwilling to sign further power purchase agreements with IPPs beyond the preferred projects selected under bid widow 4.5 of the Renewable Energy Independent Power Producer Procurement Programme (REIPPPP).

This intervention raised serious questions about the fate of projects that bid for the 1 800 MW available under the so-called expedited round of the REIPPPP, as well as the fate of the two projects, with a combined capacity of 900 MW, being evaluated under the Coal Baseload IPP Programme. It also brought into question the fate of a proposed Gas-to-Power Programme, the tender for which is expected to be released during the current fiscal year.

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Radebe said government had not changed its position regarding either IPPs or nuclear.

“In fact, this independent power producer programme is regarded as one of the best in the world, where about R192-billion of private sector investment has already been put into the South African economy. So there is no way that we can change course midstream – it’s going ahead.”

For her part, Joemat-Pettersson indicated that there “will shortly be announcements on the expedited round for renewable-energy projects as well requests for proposals (RFPs) for the coal and gas IPP projects”.

Radebe also reiterated government’s earlier position that there had been no deal with the Russians to build 9 600 MW of new nuclear capacity, but indicated that government still intended pursuing the technology, which some critics believe to be unaffordable and unnecessary in light of the other supply options available to the country.

“As you know, both the National Treasury and the Department of Energy are just starting the process of testing the market. So at an appropriate time, the issue of the costs, the issue of affordability will be decided upon before any action has been taken,” Radebe said.

He gave no indication, however, whether the nuclear RFP would be issued ahead of the finalisation of an updated Integrated Resource Plan (IRP) for electricity, which is believed to be close to completion and adjusts the plan to a lower demand scenario than is the case in the current version, which was published in 2011.

“To resolve the energy challenges in the country, the Department of Energy will complete the Integrated Energy Plan and IRP for electricity by the end of 2016 to provide certainty on electricity pricing and investment in the generation capacity,” Radebe said.

In her recent statement, however, Joemat-Pettersson indicated that the nuclear RFP would be released in compliance with the approved Cabinet directive of December 9, 2015.

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