Kickstarting 2025 on a positive note, the SA delegation to the World Economic Forum, led by Minister Ramokgopa on the energy side, has highlighted its success in reducing loadshedding. We have officially now enjoyed more than 300 days of uninterrupted power supply (if one ignores load reduction, substation failures, concerns about pollution and the like).
We also got a thumbs-up from the International Renewable Energy Agency (IRENA) assembly at its 15th session held in Abu Dhabi, where South Africa was recognised as a role model for successful African renewable projects, with specific reference to the Renewable Energy Independent Power Producer Procurement (REIPPP) Programme. The preferred bidders of the 7th bid window of the REIPPP Programme were announced on
23 December 2024.
The REIPPP Programme, together with associated procurement processes such as the Gass to Power IPP Procurement Programme and the Battery Energy Storage IPP Procurement Programme, although not without their challenges, do appear on the whole to be achieving the successful mobilisation of public and private capital in service of energy security and delivery.
In this tradition, government has at last turned its attention to the roll-out of electricity grid infrastructure, where an investment backlog of at least 15 years in the making is estimated to be around R390-billion. This backlog is severely constraining the connection of new generation electricity production. To put the R390-billion figure in context, investment from all 102 REIPPP Programme projects that have reached financial close since 2011 is reported to be R234.1-billion as at 31 March 2024.
In response to what is undoubtedly a pressing and daunting challenge, Treasury initiated a “market sounding exercise” through a Request for Information (RFI) in respect of the Design of an Independent Transmission Infrastructure Procurement Programme in last month. This RFI is designed to gather insights on the market’s interest, capabilities, and potential solutions for accelerating transmission infrastructure development. It is open to all interested parties, including private developers, financiers, DFIs and other interested stakeholders, who are invited to submit their RFI responses from 12 December 2024 to 28 February 2025.
This follows the establishment of yet another state-owned enterprise (SOE) the long anticipated National Transmission Company (NTC), a subsidiary of Eskom. The NTC has a new and ambitious, if long overdue, Transmission Development Plan which envisages the construction of 14 500 km of new powerlines and 133 000 MVA of additional transformers by 2034. May its balance sheet be an improvement on that of its parent.
And finally, an energy saving tip: the Supreme Court of Appeal has again confirmed in October last year the legal principle that a contract which has failed due to one or more unfulfilled suspensive conditions, otherwise known as conditions precedent / CPs, is invalid and unenforceable. From which it follows that such a contract cannot be revived or amended – the parties must negotiate and conclude a new agreement. Therefore, unless the strategy is to invalidate the contract for whatever reason, a multitude of frustrations can be avoided by taking any of the following steps, in a one page letter signed on behalf of all the parties to the contract:
- Where it is clear that a CP will fail at a particular time but can be met at a later stage, the date for fulfilment can be extended, provided that the extension happens before the CP is due to be fulfilled and is done in accordance with the contract.
- Where it is clear that a CP will fail but the party/parties in whose favour the CP has been included in the contract no longer need it to be met, such parties can waive fulfilment, provided again that the waiver happens before the CP is due to be fulfilled and the waiver is done in accordance with the contract.
- Where all CPs have been fulfilled or waived within the contractually agreed time periods, this fact should be recorded together with the date on which this happened. This is then also the date on which the contract as a whole is valid and binding on the parties, and enforceable by a party in court.
Shout if you need help with this or have any questions: info@sdglegal.africa.