Measures put in place to prevent fronting among independent power producers

The Department of Mineral Resources and Energy (DMRE) has told prospective Bid Window 5 bidders of the renewable energy independent power producer programme (Reippp) that it had put in place measures to prevent fronting. Picture Henk Kruger/African News Agency(ANA)

The Department of Mineral Resources and Energy (DMRE) has told prospective Bid Window 5 bidders of the renewable energy independent power producer programme (Reippp) that it had put in place measures to prevent fronting. Picture Henk Kruger/African News Agency(ANA)

Published May 27, 2021

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CAPE TOWN - THE Department of Mineral Resources and Energy (DMRE) has told prospective Bid Window 5 bidders of the renewable energy independent power producer programme (Reippp) that it had put in place measures to prevent fronting.

Speaking during a conference for bidders held virtually yesterday, Louis Moyse, acting head of contract management attached to the Independent Power Producers Procurement programme (IPP) said there was a fool proof plan to avoid fronting.

“We ensure that there is no fronting through the fact that project companies are required to report once a year on the benefits that flows to each one of the shareholders, especially the black empowerment shareholders. I must also stress that each one of the bidders, or any person who becomes aware of any allegations of fronting is compelled to report such fronting and this will be dealt with by the Department of Trade Industry and Competition,” said Moyce.

Moyce, who is responsible for sourcing South Africa's new generation capacity on behalf of the DMRE, said economic development, including black ownership, job creation of young people and women in local communities to black ownership would be prioritised in the bidding process.

“Changes in control and black equity must be approved by the department. Any changes in equity within the first three years of after the commercial operation date warrants the permission approval by the department. Any changes in equity of black people also requires permission from the department,” Moyce said.

Prospective bidders will be able to submit their bids in Bid Window 5 from August 16.

Bid Window 5 aims to make it possible for the government to procure up to 2 600 megawatts from wind and solar Photovoltaic technologies.

The Reippp Bid Window 5 procurement is in line with the Integrated Resource Plan, South Africa's energy blueprint which was gazetted in 2019, and the Ministerial Determination issued last September.

The request for proposals for Reippp Bid Window 5 is divided into three parts.

Part A sets out the general rules of the bids, Part B specifies the criteria for the bid, and Part C outlines how the comparative evaluation will be conducted.

Elsa Strydom, a senior project manager in the IPP office, said among the requirements for bidders in the Reippp Bid Window 5, was that the price offered in a bid response would be adjusted at commercial close to take into account any movement in foreign exchange or interest rates.

“After Commercial Close there will be no further foreign exchange or interest rate adjustments. The Price whether fully indexed or partially indexed reflected in a power purchase agreement (PPA) will be adjusted annually,” said Strydom.

Strydom also said that bidders in Reippp Bid Window 5 were required to bid the price which would be payable by the buyer, Eskom, in terms of the PPA to be entered into between the buyer and the project company of a preferred bidder.

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