Billions and many jobs could be lost in battle over Eskom agreement with IPPs

Billions and many jobs could be lost in battle over Eskom agreement with IPPs

- The Coal Transporters Forum is expected to proceed with an application to have agreements between Eskom and alternative energy suppliers overturned

- This comes after Judge Dawie Fourie halted an application from the CTF to prevent the agreements being into

- Both parties claim that billion of rands could be lost as well as massive job cuts, irrespective of the decision of the courts

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The Coal Transporters Forum (CTF) application to have power purchase agreements ( PPAs) between government and Independent Power Producers (IPPs) overturned could cause major job losses and well as extensive damage to IPPs.

Brenda Martin, the chief executive of the South African Wind Energy Association, who represents wind energy companies whose main objective is the removal of challenges facing the implementation of wind energy in the country

Earlier this year Eskom signed PPAs dealing with Bid Window 4 and the CTF is determined to see this agreement nullified.

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Eskom received approval for the signing of 27 renewable energy contracts as well as the purchase of alternative energy from IPPs after the Gauteng High Court struck an application to halt this process.

Judge Dawie Fourie had found that the application launched the the National Union of Metalworkers of South Africa and Transform RSA to stop the process was not a matter of urgency.

The two applicants had hoped for an urgent interdict to stop the signing of there agreements, pending the ‘main application’.

The main application had been launched by the CTF to finally interdict Eskom from signing these agreements.

Seeing as these agreements have already been signed the CTF is expected to proceed with its application to have the agreements overturned.

Martin has received permission from the court to file a supplementary affidavit, vehemently opposing the CTF’s main application on behalf of the IPPs.

She pointed out that, when deciding the main application, the court would have to seriously weigh the consequences of declaring the PPAs null and void.

An earlier affidavit on behalf of the IPPs described how they would suffer losses of up to R100 million if the PPAs were not signed and if the IPPs could not reach financial closure.

“All the opposing IPPs respondents that participated in the Bid Window 4 signed PPAs and have reached financial closure. Having done this, many of them have concluded agreements with contractors, they entered into employment relationships and concluded financial agreements with lenders.”

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Martin said that the fallout of terminating the agreements could see the companies losing billions.

As it currently stands R4 billion will be lost in agreements with contractors, another R3 billion in loans, and as much as R10 billion for agreements with local manufacturers.

Approximately 3000 jobs will be lost in the construction and manufacturing sectors.

Effectively the effect of overturning the agreements will place the continued operations of IPPs at risk.

“It would also put the sustainability of the renewable energy industry and the prospect of South Africa satisfying its national and international obligations towards carbon reduction in peril,” Martin said.

Numsa and Transform RSA told the court earlier this year that if Eskom and the government entered into these agreements it would result in massive job losses and would amount to economic suicide.

Minister of Energy Jeff Radebe announced his decision to sign the agreements, saying that the initiative would enable R56 billion of new investment in the economy as soon as three years from now.

Despite this NUMSA remained adamant that allowing for the alternative energy project would lead to massive job losses and the costs associated with alternative power sources would ultimately be carried by taxpayers.

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Source: Briefly.co.za

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