Power producers to sue Eskom

Johannesburg – A legal showdown

is looming between Eskom and a group of renewable energy companies over Eskom’s

delays in signing power purchase agreements as part of the renewable energy

independent power producer procurement (REIPPP) programme. 

As the designated buyer of

the power from the independent power producers (IPPs), Eskom is supposed to

sign 20-year power purchase agreements with the IPPs. Since the start of the

REIPPP in 2011, renewable energy projects – mainly solar and wind – have

attracted investment about R194 billion. 

But Eskom’s delay in signing

power purchase agreements with 37 IPPs has raised the ire of the renewable

energy industry. The 37 IPPs are expected to inject about R58 billion. 

The South African Renewable

Energy Council (SAREC) on Wednesday said it had obtained legal opinion which

confirmed that preferred bidders were entitled to approach a court to enforce

Eskom’s signature of Power Purchase Agreements. 

“In our opinion Eskom cannot

sidestep the binding determination of the Minister; they are bound by the

Ministerial determination, which includes signing the power purchase

agreements,” said Advocate David Unterhalter, Senior Counsel at Webber Wentzel.

Read also:  Dismay as Eskom pulls plug on power purchases

SAREC is representing the 37

IPPs affected by the delay in the signing of the agreement. “We are pleased

that the legal opinion is so very clear in their opinion that Eskom has no such

prerogative. This assures us of the strength of our legal position” said SAREC

chairperson, Brenda Martin. 

SAREC said local and foreign

investors had responded positively to the REIPPPP to date, partly because the

rules had been clear and applied fairly and consistently. “Tampering with the

rules at this stage can only damage confidence in both the programme and the

country. 

Eskom spokesman, Khulu

Phasiwe says SAREC was within its rights to seek legal opinion. “We must also

not be reckless in how we spend money. We cannot spend money on projects that

will put Eskom in financial constraint.”

BUSINESS REPORT ONLINE