A legal showdown is looming between Eskom and a group of renewable energy companies over Eskom’s delays in signing power purchase agreements as part of the renewable energy independent power producer procurement (REIPPP) programme.
As the designated buyer of the power from the independent power producers (IPPs), Eskom is supposed to sign 20-year power purchase agreements with the IPPs. Since the start of the REIPPP in 2011, renewable energy projects – mainly solar and wind – have attracted investment about R194 billion.
But Eskom’s delay in signing power purchase agreements with 37 IPPs has raised the ire of the renewable energy industry. The 37 IPPs are expected to inject about R58 billion.
The South African Renewable Energy Council (SAREC) on Wednesday said it had obtained legal opinion which confirmed that preferred bidders were entitled to approach a court to enforce Eskom’s signature of Power Purchase Agreements.
“In our opinion Eskom cannot sidestep the binding determination of the Minister; they are bound by the Ministerial determination, which includes signing the power purchase agreements,” said Advocate David Unterhalter, Senior Counsel at Webber Wentzel.
SAREC is representing the 37 IPPs affected by the delay in the signing of the agreement. “We are pleased that the legal opinion is so very clear in their opinion that Eskom has no such prerogative. This assures us of the strength of our legal position” said SAREC chairperson, Brenda Martin.
SAREC said local and foreign investors had responded positively to the REIPPPP to date, partly because the rules had been clear and applied fairly and consistently. “Tampering with the rules at this stage can only damage confidence in both the programme and the country.
Eskom spokesman, Khulu Phasiwe says SAREC was within its rights to seek legal opinion. “We must also not be reckless in how we spend money. We cannot spend money on projects that will put Eskom in financial constraint.”