The deadline for independent power firms in SA to attain financial closure on the emergency power scheme to accelerate new electricity generation has been delayed further. The Risk Mitigation IPP Procurement Programme was designed to close SA’s power supply shortfall as rapidly as possible. However, the project has been repeatedly delayed.
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The Department of Mineral Resources and Energy has once again extended the deadline for 11 firms to complete a financial close on a project designed to expedite emergency power generation to reduce load shedding. This is the third extension of the deadline. The Risk Mitigation Independent Power Producer Procurement Program was created by the state to allow independent power producers to quickly contribute around 2000MW of electricity to the national grid.
Financing the Emergency Power Scheme
Preferred bidders, including floating powership operator Karpowership SA, were previously expected to attain financial closure by the “non-negotiable” end-of-July 2021 deadline. As firms failed to secure regulatory permissions, this was eventually extended to the end of September and again until the end of January 2022. This deadline has been pushed out two months to the end of March. Delays were also created by a lawsuit filed by a losing bidder. DNG Energy contended in court in early December that the emergency power scheme had been tainted by “undue influence” in favour of its rival Karpowership SA and should be scrapped. The government disputed reports that a scheme was hatched to prevent DNG Energy from winning its bid, claiming that the emergency business was merely excluded for failing to satisfy bidding standards. DNG’s assertions were also refuted by Karpowership, who called them absolutely ridiculous. Although the legal challenge was denied, DNG said it may appeal.
The Department of Mineral Resources and Energy stated on Monday that the verdict “allows the government and Eskom to finalize their governance and regulatory clearance processes.” These projects are projected to be operational and ready to offer much-needed power capacity to the national grid 12 months after financial close.
