Lynne Brown is the Minister of Public Enterprises.  Photo: Simphiwe Mbokazi
Lynne Brown is the Minister of Public Enterprises. Photo: Simphiwe Mbokazi

IPP impasse still not settled

By Siseko Njobeni Time of article published Dec 18, 2017

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JOHANNESBURG - There is no end in sight to the impasse between Eskom and the renewable energy industry about the conclusion of power purchase agreements after Public Enterprises Minister Lynne Brown on Friday said pricing for renewable energy independent power producers (IPPs) remained unresolved.

Addressing journalists before attending Eskom’s special general meeting at the utility’s offices, Brown said that the Department of Public Enterprises and the National Treasury had to resolve “pricing and cost issues” that had been raised by the power utility. “Eskom has raised the risks and (they) need to be dealt with,” said Brown.

She denied allegations that she was also digging in her heels on the matter. “I still do not have a (Public Finance Management Act, PFMA) application on my desk,” she said.

Eskom interim chief executive Sean Maritz on Friday said PFMA required Eskom to raise risks in the conclusion of the IPP power deals if there were any. “We need to create a sustainable Eskom for the future. We need to, from a fiduciary point of view, raise the risks,” said Maritz.

Contrary stance

Brown’s stance was contrary to Energy Minister David Mahlobo’s claims that Eskom would sign the long-awaited agreements with 27 IPPs in the so-called bid window 3.5 and 4 of the Renewable Energy Independent Power Producer Procurement (Reippp) Programme.

Eskom has consistently refused to sign power purchase agreements with projects approved for the so-called bid-window 3.5 and 4 of the government-run Reippp programme citing costs and overcapacity.

The utility, which is the designated buyer of electricity from IPPs, has maintained that it would sign the power purchase agreements with IPPs at a pace and scale it could afford. It has in the past raised concerns about the uncertainty on the cost recovery mechanism for IPPs’ energy costs. It also said it was also concerned about its long-term financial sustainability. The government has previously missed self-imposed deadlines to conclude the agreements.

In February former Energy Minister Tina Joemat-Pettersson said the signing of the agreements was imminent following President Jacob Zuma’s announcement during the State of the Nation address. She said at the time that the impasse between Eskom and the IPPs had been broken.


She subsequently set an April 11 deadline for the signing of the agreements. She was removed as Minister of Energy in Zuma’s midnight cabinet reshuffle on March 31.

Joemat-Pettersson’s successor Mmamoloko Kubayi set a new deadline for the conclusion of the deals. She was also moved to the communications portfolio before the end of October deadline she had set.

Eskom spokesperson Khulu Phasiwe last week said the utility’s board wanted to discuss with Brown “a number of critical issues that the company is grappling with. In due course, Eskom will make a formal pronouncement about the way forward on all of these issues, including the signing of the renewable energy projects.” Eskom is the designated buyer of renewable energy from the IPPs.

Meanwhile, Brown on Friday said that she was not aware that suspended Eskom executive Matshela Koko had been cleared of the charges he was facing, reacting to reports that Koko had been found not guilty of all the charges he was facing and would be making his way back to the utility.


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