Eskom wants IPP deals: Hogan

I-Net Bridge | Tue, 24 Nov 2009 18:16
[miningmx.com] -- Eskom was keen to close agreements with independent power producers (IPPs), according to Public Enterprises Minister Barbara Hogan.

However, this could only be achieved in "an enabling environment" where long-term power purchase agreements were possible, she said.

Hogan, in giving a written reply to Democratic Alliance spokesperson Manie van Dyk circulated on Tuesday, made it clear that delays securing power from IPPs was to be laid at the door of her cabinet colleague, Energy Minister Dipuo Peters.

In order to enable deals with IPPS, there must be confirmation of an integrated resource plan by the energy department indicating what capacity could be allocated to IPPs, she said.

The resource plan must also provide the approval of an appropriate cost recovery mechanism by the National Energy Regulator (Nersa).

This would give assurance to the procurer of energy, currently Eskom, and the IPP that the costs associated with the power purchase agreement would be recoverable from the tariff for the life of the agreement.

Finally Eskom needs a tariff that clearly caters for the purchase of this power.

"In the last financial year, Eskom did not enter into any power purchase agreements because the cost recovery mechanisms were uncertain," Hogan said.

Hogan said the names of the 23 shortlisted bidders could not be released owing to the confidentiality of the commercial process. They were however pre-qualified and an additional four bidders were conditionally qualified in the fourth quarter of 2008.

Asked by Van Dyk why Eskom was not speeding up private participation, Hogan said the energy department was directly responsible for the promotion of private participation in the independent production of electricity, and Eskom cooperates with it.

"Eskom is prepared to issue the request for proposal as soon as there is clarity on the enabling environment," Hogan said.

"Eskom is engaging with key stakeholders (Department of Energy, Department of Public Enterprises, National Treasury and Nersa) to ensure the enabling environment is resolved."