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Jul 26, 2012

Further financial-close delay in prospect for 28 renewables bidders

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The 28 renewable-energy project developers identified in December as preferred bidders, following the first bid window under South Africa’s R100-billion Renewable Energy Independent Power Producer Programme (REIPPP), have been notified that the timing of financial closure may be delayed beyond the end of July.

News of yet another possible extension emerged only days after Energy Minister Dipuo Peters indicated that the deadline had been extended by the Department of Energy (DoE) to the end of July, from an initial deadline of June 19.

But the developers have since received correspondence stating: “Notwithstanding the Minister of Energy’s reference last week to the extension of financial close to the end of July, the department is not currently in a position to advise preferred bidders of the earliest date on which the department and Eskom could conclude the implementation agreements, the power purchase agreements and the direct agreements.”

The correspondence indicates that approvals are still being processed and that the department will issue further communication “as soon as possible”.

The note states, too, that the “department has no reason to believe that the approvals will not be forthcoming, but the process for obtaining them is taking longer” than had been anticipated.

The DoE and the National Treasury did not immediately respond to questions directed to them by Engineering News Online seeking clarity regarding the reasons for the delay, as well as what impact the postponement could have on the 19 second-round preferred bidders and plans for the opening of the third bid window.

Peters indicated previously that the postponement had been designed to “meet developers halfway” as some projects were battling to meet the “stringent” requirements of financial institutions, while others were dealing with environmental appeals processes, or working on ways to meet the jobs, local content and community development commitments outlined in their bids.

But Engineering News Online has learned that some developers are uncomfortable with the prospect of yet another delay, as these could have material costs implications for their projects as contracts have been concluded with suppliers.

The 28 first-window projects collectively represent about 1 415 MW. But any capacity not absorbed through a failure to reach closure will be added into the third bidding round, or any subsequent tenders that could emerge.

Through the REIPPP, the DoE aimed to procure 3 725 MW of capacity, which could be introduced into South Africa’s power generation mix between 2014 and 2016.

During the first two bid windows, 47 onshore, wind, solar photovoltaic and concentrate solar projects advanced to the preferred-bidder stage – the projects represented potential capacity of 2 459.4 MW.
 

Edited by: Creamer Media Reporter
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