File picture: Reuters/ Mike Hutchings

Pretoria - The Coal Transporters Forum (CTF), which transports coal to Eskom, lost its legal bid against government to stop it from signing deals with Independent Power Producers (IPP).

Gauteng High Court Judge Piet Meyer delivered his judgment on Tuesday in which its dismissed the CTF’s application with costs.

The case involves electricity generation from renewable energy sources in line with government’s policy decision to move towards low-carbon economy and to introduce energy from private sector renewable energy technologies into the mix of energy sources.

The ministry of energy published determinations relating to renewable energy in 2011 and 2012. In terms of this it was determined that, in consultation with the National Energy Regulator of South Africa (Nersa), 3 725 MW and a further 3 200MW of new renewable energy capacity should be procured by Eskom from independent private producers (IPP’s). 

This was to be done through a procurement programme conducted by the department of energy.

A bidding process followed and successful IPP bidders were announced. Eskom subsequently concluded power purchase agreements (PPA’s) with all the successful bidders, except with three.

The CTF argued that Eskom may not conclude PPA’s with the IPP’s until the regulator has taken decisions on certain matters, such as the price tariff. 

It turned to court to interdict Eskom from concluding these deals until all the decisions had been taken. It also wanted those deals which were already sealed, to be declared invalid.  .

The agreement government has entered into with the IPP’s involve energy sources such as bio gas, biomass landfill gas and small hydro and other forms of energy.

This case only concerned the successful bidders in Bid Windows 4 and the Small Projects Programme.

Judge Meyer concluded that these deals had already been signed. Thus, to interdict Eskom from concluding these PPA’s, is moot.

He also concluded that there was no merit in the CTF’s application to overturn these deals. One of the CTF’s gripes was that the government first had to determine the price upon which the IPP’s will sell their electricity to Eskom. 

The judge said there was no merit in this argument, as the energy regulator may regulate these matters by imposing licence conditions on the IPP’s.

He said the regulator had done everything it was supposed to do prior to signing these deals and therefore there was nothing left for its discretionary determination.

Judge Meyer made it clear that these deals stood in place until it was legally challenged via  a review application and not merely by means of an application to declare a contract entered into, as null and void.

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