Minister approves Eskom's Power Purchase Agreements

Friday, February 2, 2018

Public Enterprises Minister Lynne Brown on Friday announced her approval of Eskom’s application to purchase additional renewable energy from Independent Power Producers (IPPs).

“The conclusion of the Power Purchase Agreements (PPAs) to enable the implementation of the outstanding projects under bid windows 3.5, 4 and 4.5 of the Renewable Energy Independent Power Producers Programme (REIPPP) is critical to implementation of the national energy policy as articulated in the Integrated Resource Plan of 2010,” said the Minister.

This as the power utility submitted an application to the Minister under Section 54 of the Public Finances Management Act to purchase the additional energy. The Minister approved the 11 January application on Friday.

Minister Brown said South Africans ought to feel proud about progress made in adding renewable energy to the energy mix.

“There are risks to Eskom’s financial and operational stability in the medium term, among others, that must be mitigated. We are committed to reducing our carbon footprint,” Minister Brown said.

Former Energy Minister Mmamoloko Kubayi-Ngubane in September announced that PPAs for bid windows 3.5 and 4 of the REIPPP would be signed by the end of October 2017.

“The Department of Energy, through the IPP office, will engage with all affected parties for bid window 3.5 and 4 to renegotiate not above 77 cents per kilowatt hour,” Minister Kubayi–Ngubane said at the time.

The renegotiation will assist in reducing the requirements for additional government guarantees that would impact negatively on the current economic climate and constraints in the fiscus.

On Friday, Minister Brown requested Eskom to work expediently to implement the decision and avoid further delays.

“I have also written to the Ministers of Energy and Finance requesting that we discuss how to address Eskom’s genuine concerns through expediting a revision of the Government Support Framework Agreement.”

The finalisation of amendments to the National Energy Regulation Act would enable Eskom and the National Energy Regulator of South Africa (NERSA) to efficiently and effectively resolve deadlocks relating to tariffs and regulatory frameworks by including a pre-determined appeal mechanism.

The Department of Energy launched REIPPP in 2011, which called for 3 725MW of renewable energy technologies.

Eskom is one of the six state owned companies’ under the ambit of the Department of Public Enterprises. -

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