File picture: Jason Lee/Reuters
Pretoria - If the Coal Transporters Forum succeeds with its application to have power purchase agreements (PPAs) between government and Independent Power Producers (IPPs) overturned, this could result in significant job losses and cause massive losses for IPPs.

This is according to Brenda Martin, the chief executive of the South African Wind Energy Association, which represents the interests of wind energy companies, its principal objective being the removal of obstacles to the implementation of sustainable wind activities in South Africa.

Eskom earlier this year signed PPAs in respect of Bid Window 4, and the Coal Transporters Forum is set on having these declared null and void.

Eskom received the go-ahead in the signing of 27 renewable energy contracts and the purchase of alternative energy from IPPs after the Gauteng High Court, Pretoria, in April struck an application to halt this process from the roll.

Judge Dawie Fourie found that the application launched by The National Union of Metalworkers of South Africa (Numsa) and Transform RSA to halt the process was not urgent.

The two applicants wanted an urgent interdict preventing the signing of these agreements, pending “the main” application, launched by the Coal Transporters Forum.

In that application the Coal Transporters Forum wanted the court to finally interdict Eskom from signing these agreements. But as these agreements were subsequently signed, the Coal Transporters Forum is expected to go ahead next year with its application to have the agreements overturned.

Martin has received permission from the court to file a supplementary affidavit, in which she vehemently opposed the Coal Transporters Forum’s main application on behalf of some of the IPPs. She said that when deciding the main application, the court will have to have regard to the consequences of declaring the signed PPAs null and void.

It was earlier described in an affidavit on behalf of the IPPs that they would suffer losses of up to R100million if the PPAs were not signed, and if the IPPs could not reach financial closure.

“All the opposing IPPs respondents that participated in the Bid Window 4 signed PPAs and have reached financial closure. Having done this, many of them have concluded agreements with contractors, they entered into employment relationships and concluded financial agreements with lenders.”

Martin said the consequence of terminating these agreements is that they could lose billions. She said they stood to lose up to R4bn for agreements entered into with contractors, another R3bn in loans and up to R10bn for agreements entered into with local manufacturers. This is apart from the up to 3000 job losses in the construction and manufacturing sector.

Martin said that all in all the effect of overturning the agreements which had already been signed would place the continued operations of IPPs at risk. “It would also put the sustainability of the renewable energy industry and the prospect of South Africa satisfying its national and international obligations towards carbon reduction in peril,” she said.

Numsa and Transform RSA in April this year told the court that if Eskom and the government were allowed to go ahead with signing the contracts, it will not only result in massive job losses, but it will also result in economic suicide.

When he announced his decision to sign the agreements, minister of energy at the time Jeff Radebe said the initiative would enable R56bn of new investment in the economy over the next two to three years.

However, Numsa said it would lead to massive job losses due to the closing of power stations and the massive costs associated with the alternative power supply would ultimately have to be carried by the citizens of South Africa.

The project entailed an alternative form of energy loosely referred to as mixed-use renewable energy, comprising solar, wind and biomass as a source to generate energy.

Pretoria News