Eskom CEO Andre de Ruyter has denied that the utility is delaying the introduction of new electricity capacity procured under the Risk Mitigation Independent Power Producer Procurement Programme (RMIPPPP), as suggested by Minerals Resources and Energy Minister Gwede Mantashe in a recent television interview.
Speaking to Newzroom Afrika this week, Mantashe said that Eskom was “toing and froing” on the 11 RMIPPPP projects, including three powership projects, which was contributing to the delay in the introduction of 1 995 MW of new capacity.
Without offering specifics, Mantashe said that Eskom had raised various problems with the RMIPPPP projects, saying “they don’t want this, they don’t want that”.
The Minister also dismissed suggestions that no new capacity was being added, noting that besides the RMIPPPP projects another 2 600 MW was being procured following the most recent renewables procurement round, known as Bid Window 5.
He made no mention of the fact that government had decided to delay the deadline for the financial close of the RMIPPPP projects to the end of January.
Mantashe also questioned whether De Ruyter understood the energy industry if he did not accept that there would be a time lag before new capacity could be introduced to cater for financial close and construction.
The Eskom CEO insisted that the utility was not the cause of the delay in the conclusion of the RMIPPPP contracts.
He noted that Eskom had not yet received final documentation from the IPP Office, including the power purchase agreement.
“It’s a bit difficult to sign an agreement when you don’t know what the agreement looks like,” De Ruyter said.
Eskom was also concerned that the maximum price methodology for gas had not been addressed between the National Energy Regulator of South Africa, the IPP Office and the Department of Mineral Resources and Energy, with outstanding matters relating to indexation being central to the final commercial arrangements.
“We would be, I think, remiss in fulfilling our fiduciary duties towards Eskom as a legal entity if we were to enter into agreements without knowing what the key commercial terms are that we are signing up for.
“This is, therefore, not something that we are resisting, but we do have to have all the facts on the table,” De Ruyter said.
There had been ongoing engagements with the IPP Office to address the outstanding issues, but these had not yet been resolved.
Litigation related to the powership contracts, which also had not yet received environmental authorisation, also made it “difficult for Eskom as the designated single buyer to sign an agreement that we have not yet seen”.
On the 25 renewables projects identified as preferred bidders in late October, Eskom was proceeding with its governance processes, which should be concluded by March 2022, which is in line with the timeframe outlined by the IPP Office for Eskom to complete its internal review.
“We are trying to expedite this, and I have repeatedly welcomed the capacity that will be created by the bid window five projects.
“We have absolutely no interest in delaying new capacity from coming onto the grid, obviously [with the proviso] that these are on commercial terms that we can justify, as I don’t have any particular desire to be designated a delinquent director by agreeing to a contract that we haven’t seen and where the commercial terms are not fully understood.”