Electricity Minister Dr Kgosientsho Ramokgopa has reiterated his position that any procurement of electricity from powerships should be limited to a maximum of five years, describing such a term as “non-negotiable”, while also warning that imposing such a restriction could result in higher tariffs.

He is far less unequivocal, however, about how such electricity might be procured, indicating that it could be the outcome of direct negotiations with Karpowership, which remains a preferred bidder for projects with a combined capacity of 1 200 MW under the much-delayed Risk Mitigation Independent Power Producer Procurement Programme (RMIPPPP), or an entirely new emergency procurement process.

“My definition of an emergency is that it can’t be more than five years and we are standing by that position,” Ramokgopa said during his weekly update on the implementation of the Energy Action Plan.

“Of course, that has implications for the tariff, as the longer the period the flatter the tariff structure is.”

The affordability of such a tariff, he added, could be assessed by comparing it to the cost of production from the diesel-fuelled open-cycle gas turbines, which he described as a high-cost outlier, or to the tariffs achieved from the first three bid windows of South Africa’s renewable public procurement programme.

“If it’s favourable, it is something worth pursuing,” he said.

On whether Ramokgopa has the power to negotiate a term shorter than the 20 years associated with the RMIPPPP should Karpowership eventually secure the environmental authorisations required to progress projects at Richards Bay, Ngqura and Saldanha Bay to financial close, he said: “I have determined what constitutes an emergency, period!”.

He added he had not yet had engagements with Karpowership about shortening the timeframe, but “how I enter that conversation is on the basis that the period I have outlined is non-negotiable”.

“It can’t be anything more than five years, I give you that assurance,” he said, repeating the timeframe provided to lawmakers earlier in the week when he said 2 000 MW of powership capacity should be procured.

Owing to the fact that Karpowership had not yet secured the authorisations needed to proceed, Ramogkopa indicated that the RMIPPPP process was still ongoing and that negotiations were still possible.

“To the extent that those negotiations can result in reducing that period to five years, I think that would be a welcome development, because then you don’t need to run any new process.

“But to the extent that we are unable to find each other, then . . . under my new powers I can go out and make a new determination that we need that emergency procurement, and it will be on the terms as stated above in relation to the timeframe and will undergo a competitive bidding process like all other tender processes as is required in the country.”

He said the rationale for a shorter contract term was based on the fact that South Africa was likely to be able to close its current supply deficit using mostly renewables and battery storage within about three-and-a-half years.

“Let’s say you give it [powerships] 10 to 20 years, do you want to tell me that, in that period, you will not be able to find additional energy sources to close what essentially constitutes the deficit.

“And I must say that, from my engagement with the Ministers, my peers, we are not at odds on this one.”