Mineral Resources and Energy Minister Gwede Mantashe
Photo by: Creamer Media's Donna Slater
Mineral Resources and Energy Minister Gwede Mantashe confirmed on Tuesday that not all of the 11 Risk Mitigation Independent Power Producer Procurement Programme (RMIPPPP) preferred bidders would be in a position to conclude power purchase agreements (PPAs) at the end of March, the deadline for the projects to reach financial close.
During a Parliamentary debate on President Cyril Ramaphosa’s recent State of the Nation Address (SoNA), Mantashe said steps were being taken to address a current supply shortfall that the President estimated to be 4 000 MW, but which several commentators believe to be closer to 6 000 MW.
He said PPAs would be signed next month with RMIPPPP preferred bidders, which were selected as part of an emergency, albeit much delayed, procurement round for 2 000 MW.
The projects were selected in March last year and the initial financial close deadline of July was extended initially to the end of September, then to January this year and finally to the end of March.
“The challenge is that not all of the RMIPPPP preferred bidder projects may be in a position to conclude power purchase agreements due to outstanding processes on their side,” Mantashe told lawmakers.
His statement gels with the one made by Ramaphosa in his SoNA speech, in which the President announced that only 800 MW of the 2 000 MW in projects selected under the RMIPPPP were ready to proceed.
Given that three Karpowership projects comprised about 1 200 MW of the RMIPPPP allocation, there was immediate speculation that the projects, which face legal, environmental and gas-pricing uncertainty, were among those that were not ready to proceed.
Mantashe also announced that 2 600 MW of renewable energy being procured under Bid Window 5 of the Renewable Energy Independent Power Producer Procurement Programme would enter into PPAs in April and announced that Bid Window 6 for another 2 600 MW of wind and solar would be launched at the end of March.
“Thereafter, additional bid windows, including Bid Window 7, will follow at six-month intervals.”
The Minister also announced that a request for proposals for 513 MW of battery storage would be released in April.
No specific timeframes were provided for the launch of procurement processes for gas-to-power and so-called clean-coal, as catered for in the Integrated Resource Plan of 2019, but Mantashe offered his now customary defence of both fossil fuels, as well as that of nuclear.
“It is comforting to see that there is now growing global consensus on the role of gas and nuclear in the energy transition.
“The European Union has labelled these technologies as part of the green transition,” he asserted, referring to a controversial February decision of the European Commission to allow, under specific conditions, some gas and nuclear activities to be considered sustainable.
Mantashe also announced that government was addressing suspensive conditions set by the National Energy Regulatory of South Africa “before we can issue a request for proposal for 2 500 MW of nuclear energy”.
The Department of Mineral Resources and Energy recently published a terms of reference document for a service provider to develop a framework for the procurement of new nuclear capacity. The tender will close on February 25.
REFINERY SHUTS SLAMMED
The Minister also used his speech to slam as greedy and arrogant the decision of certain international energy companies to shut their local oil refineries in favour of imports.
On February 10, bp Southern Africa and Shell Downstream South Africa announced that they would pause refinery operations at Sapref by no later than the end of March 2022.
“This will be for an indefinite period but with a re-start possible in the future, including in the event of any future sale,” the companies said in a statement.
In April last year, Engen that it would shut the Engen Refinery and convert the site into an import terminal and product storage facility by the end of 2023.
Mantashe said the closures would “cause job losses to our people, cost our economy dearly, and lead to uncertainty of supply”.
“For our national and economic security, we are taking drastic measures in this regard,” he said.