While the Department of Energy (DoE) has indicated that standard documents would be developed to reduce transaction costs related to bidding for the small projects Renewable Energy Independent Power Producer Procurement Programme (REIPPPP), local advisory firm Infrastream director Grant Berndsen has urged prequalified bidders not to delay their preparation for the first Stage 2 submission in anticipation of these documents being released.
The first Stage 2 submission date for prequalified bidders that had submitted proposals during Stage 1 bidding, was November 2, while the second Stage 2 submission date was set for February next year.
Infrastream said the transaction costs associated with bidding were a concern for bidders and that, although the Stage 2 process of the small projects REIPPPP was put in place to help bring down transaction costs, bidders still had to meet the requirements of the request for proposals (RFP), which was no simpler than previous editions of the RFP.
It added that, to date, government had given no formal indication that the November submission deadline would be shifted or that standard documentation to reduce transaction costs would be made available ahead of this deadline.
“[Therefore], our recommendation to prequalified bidders that are delaying their preparation work in anticipation of the DoE releasing standard documents is to not delay their bid preparation any longer. Bid preparation is a time consuming exercise and must begin well in advance of the submission date,” Berndsen said.
He added that, with each successive round of the REIPPPP, competition had increased and tariffs had dropped and, therefore, bidders that had prequalified and had access to the necessary finance should submit on November 2 to take advantage of the likely benefits that come from being an early entrant into the market.
Further, while government had made mention of a fund to assist small IPPs with transaction costs, this was only expected to be up and running by February next year.
“Given the stringent requirements associated with bid submission, many IPPs are questioning the feasibility of their small projects given the perceived high costs of bidding.
“We encourage bidders in the small projects programme to seek alternatives to using costly traditional advisory services or employing permanent employees to manage this process,” Berndsen said.