“I am delighted to announce that the project agreements for the 27 renewable energy independent power producer projects (REIPPP), including the power purchase agreements with Eskom, will be signed on Tuesday, 13 March 2018, with the full support of the president and my cabinet colleagues the ministers of finance and public enterprises as well as Eskom,” he says.
The minister said signing the agreements would reaffirm government’s commitment not only to renewable energy, but also to a solid partnership with the private sector in pursuing energy transition objectives for the future.
“This initiative will enable R56bn of new investment in the economy over the next two to three years, which will immediately contribute to growth in the economy supporting the already positive achievement of 3.1% GDP growth in the quarter four,” he said.
Creating 61,000 full-time jobs
The programme, will have a significant contribution in job creation across the energy value chain, including the re-establishment of industrial development and support to the technical training of young people to be absorbed in the labour market.
“In a nutshell, these projects will provide 61,600 full-time jobs of which 95% are for SA citizens, mostly during plant construction specifically with a focus on youth employment.
“Northern Cape will have 59% of the jobs created, followed by Eastern Cape with 15% and North West 13% of jobs created,” he said.
The minister said black participation is anticipated to increase not only at ownership level, but at operational level, and added that the construction and operation of the projects will eventually lead to the creation of black industrialists.
Local community shareholding (equity share) in the 27 projects amounts to 7.1% (or R1.6bn), and these shareholders will receive R5.9bn net dividends over the 20-year lifetime of the projects. This will have a substantial positive impact on the living standard of the communities around these projects.
Communities through community trusts have full control over how the money will be spent in their areas.
The IPPs will enable local communities to further benefit directly from the investments attracted to the areas through the R9.8bn to be spent on socio-economic development initiatives and R3.4bn to enterprise development over the 20-year lifetime of the project agreements.
“As part of the bid obligations, the bid window 3.5 and 4 preferred bidders have made commitments in five categories, namely, education and skills development, social welfare, healthcare, general administration and enterprise development. The majority of the money will be spent in these local communities around the projects and will involve women-owned small businesses. It will also ensure youth participation and development, whether through skills transfer and training, bursaries and/or the establishment of small businesses,” he said.
Radebe has requested the IPP office to start finalising all outstanding requirements for the signing of the 20 small renewable programme (projects between 1MW and 5 MW) projects, which will have a substantial impact on a different market segment and contribute to creation of small businesses. This will immediately ensure a R2.7bn investment in this part of the economy.
The Development Bank of South Africa and the German development finance institution, KfW, have established access to affordable funds for small businesses to participate in the green economy and therefore the small renewable energy programme.
“Together this will achieve a further R103bn of investment in the economy with substantial foreign direct investment.”
Meanwhile the South African Wind Energy Association (Sawea), together with the broader renewable power sector, have welcomed the commitment from the minister. “The Industry is therefore immensely relieved to receive confirmation today from Minister Radebe that PPAs will be signed with no further delay,” said Brenda Martin, CEO of Sawea.
“The task of getting the REIPPPP, which has endured extended policy uncertainty for over two years, back on track will no doubt be a challenge for all involved, however, the industry has reaffirmed its commitment to working with government, civil society and labour to ensure that the programme makes an optimal contribution to job creation, advancing the transformation agenda and attracting further foreign direct investment.”
