Gordhan throws weight behind R58bn renewable IPP plan

Pravin Gordhan, minister, Department of Public Enterprises

FINANCE minister Pravin Gordhan threw his weight behind South Africa’s renewable independent power producer (IPP) programme amid criticism, most notably by Eskom CEO, Brian Molefe, that it was expensive, inefficient and unsuitable for baseload power.

“Contrary to the views of some, these [renewable IPPs] are sound and sensible long-term investments,” said Gordhan. He was commenting in the Medium Term Budget Policy Statement delivered in Parliament today.

“A total of 64 projects are already in progress, bringing investment, jobs, clean energy and community development,” said Gordhan.

“Once Eskom has signed the offtake agreements, a further R58bn in investment and some 4,800 construction jobs will commence, bringing 2,354MW of capacity to the electricity grid,” he added.

Molefe allegedly refused to sign off a renewable IPP involving the Saudi energy group ACWA Power earlier this year – a claim that was subsequently denied by Eskom.

But Molefe has been vocal about renewable IPPs.

Speaking at Eskom’s year-end results presentation in May, Molefe said: “I’m uncomfortable with the high cost of IPPs”, adding that he preferred nuclear technology.

“They are the most expensive form of generation,” said Molefe. “One day, they may mature and become the cheapest form of power, but right now, they are not,” he added.

According to Eskom data, IPPs represent 18% of total primary energy cost but only 4% of generation whereas nuclear energy was a more suitable form of baseload power, available throughout the day.

Commenting on South Africa’s plans to build nuclear energy, Gordhan confirmed Eskom would “take the lead” in the nuclear power initiative, but he fired a broadside at vested interests.

“The Treasury will work with Minister [Tina Joemat-Pettersson, energy minister] Brown’s department and Eskom to ensure that the scale and phasing of the programme are in South Africa’s best interests and that the procurement arrangements are transparent and compliant with the law,” he said to cheers from some MPs.