Minister defends IPP programme against critics

Energy: Minister defends IPP programme against critics

Government has voiced strong support for Eskom's Independent Power Producer (IPP) programme in the face of criticism from trade unions, the EFF and former Eskom officials who blame the programme for causing the utility's financial crisis, writes Legalbrief. To claim Eskom incurred losses because of its IPP programme was false, Energy Minister Jeff Radebe said last weekend. According to a Business Day report, the IPP programme has been criticised for being responsible for the financial crisis at Eskom, which cannot service its debt of more than R419bn. Radebe told reporters renewable energy IPPs were cost neutral to Eskom as the cost was passed on to the consumer. ‘The assertion therefore that Eskom incurs losses as a result of the IPP programme is without foundation, misleading and false. Since 2013, Eskom has not incurred a cent in buying electricity from the IPPs which they have not been able to recover through the tariff allowance,’ the Minister said. ‘Eskom’s financial problems are mostly related to the cost increases, including the increased interest during construction, associated with the delay of the new-build projects, Medupi, Kusile and Ingula,’ Radebe went on to say. ‘Eskom is not borrowing money for buying the electricity generated by IPPs or for funding the construction of the IPPs. Similarly, up to 2018 Eskom has presented annual positive ebitda margins,’ said Radebe. Radebe said that to ensure a competitive, open, fair and transparent process in the IPP programme, the government established the IPP Office, under the Department of Energy and the Treasury. ‘The tender process and the awarding of contracts are fair, open and transparent and the security around the evaluation process mitigates the risks of corruption and interference,’ he said.

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Peter Atkins
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