Most Read Contributor in South Africa, November 2016
Currently, there are no major law suites pending, which pertain
to projects procured under the Renewable Energy Independent Power
Producers Procurement Programme (REIPPPP), owing to the transparent
and credible nature of the tender process, Law firm Edward Nathan
Sonnenbergs (ENS) director and head of projects and projects
finance department Eric le Grange tells
He points out that the issue of corruption is firmly addressed
in the implementation agreement, which includes clauses on imposing
heavy penalties and the possible immediate termination of
agreements if any form of corruption is committed.
He says the REIPPPP has to comply with many laws, such as those
pertaining to land rights. Most of the REIPPPP projects are built
on farmlands, so the clauses dealing with subdivision in the
Agricultural Land Act have to be complied with. The Act states that
agricultural land cannot be subdivided unless consent is given by
the Minister of Agriculture, Forestry and Fisheries.
"Government does not want to cut up agricultural land into
uneconomical pieces; therefore, even if a person has a long term
lease over certain portions of agricultural land, the lessee will
need the Minister's permission," explains Le Grange.
The REIPPPP is also affected by the Mineral and Petroleum
Resources Development Act (MPRDA) because the consent of the
Minister for Mineral Resources is required in respect of any
development which may be contrary to the use of issued mineral
rights for a particular area in future.
Other laws, which impact on REIPPPP projects, include the
National Heritage Act, the National Environmental Management Act,
the Water Act, local regulations, civil aviation regulations,
communication regulations, provincial and municipal regulations, as
well as general government regulations.
He points out that REIPPPP projects, in some instances, can
require more than 20 individual approvals and permits to be
implemented. He applauds government for fast-tracking what could
have been an even more laborious process, as it could easily have
taken longer had there not been a proactive will on the part of
ENS has been involved with the groundwork of the REIPPPP since
2010 and Le Grange notes that problems around the procurement of
additional electricity generation capacity by government existed
before the advent of the programme. "There was not a fully
developed regulatory environment for independent power producers
(IPPs) in place or a framework as to how or to whom IPPs would sell
their electricity," he says.
In 2010, the firm received a request from National Treasury to
assess the regulations issued under Section 34 of the Electricity
Section 34 empowers the Minister of Energy to conduct
electricity procurement programmes, which will provide additional
electricity capacity to enter the market. This additional capacity
is procured by the Department of Energy (DoE) and bought by an
entity designated by the DoE as the purchaser.
ENS and law firm Webber Wentzel, advised on the redrafting of
regulations, now known as the Electricity Regulation on New
Generation Capacity, which was published for comment in November
2010. The final version of the Electricity Regulations on New
Generation Capacity was promulgated on May 4, 2011.
These regulations provided the basis for government to launch
the IPP programme on August 3, 2011.
Initially, there were many gaps and inadequacies in the
regulations, as they were based on procurements, as opposed to
broader project procurement.
ENS lawyers are working with the various government departments
involved in the REIPPPP, such as National Treasury and the DoE, and
with private-sector bidders and the financial institutions to
ensure legal compliance of all REIPPPP projects.
Previously published by Engineering News online, 28 June
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