Energy & Environment

Wednesday, 27 March 2019 14:56

Renewable Energy Independent Power Producers' contracts with Eskom secured in key judgement

Written by 

By Michael Evans & Megan Adderley, Partners at Webber Wentzel

Webber Wentzel helped achieve a significant victory for the Independent Power Producers (IPPs) when Judge Meyer of the Pretoria High Court on 26 March2019, dismissed a declarator and interdict application brought by the Coal Transporters Forum (CTF).  The CTF sought to set aside the Power Purchase Agreements (PPAs) concluded pursuant to Bid Window 4 and the Small Projects Programme of the Renewable Energy Independent Power Producer Procurement Programme, and which were signed in April last year, and prevent the signing of the last 3 PPAs.  Webber Wentzel represented 27 IPPs.

This judgment comes after Webber Wentzel's success last year March when the Pretoria High Court struck from the roll an urgent interdict application brought by the National Union of Metal Workers of South Africa (NUMSA) and a Gupta-linked entity, Transform RSA, supported by the CTF, seeking to stop the Minister, Eskom and the IPPs from signing the PPAs.  Webber Wentzel assisted many of the IPPs after this ruling, to sign the PPAs and reach financial close.

In the recent case CTF were again supported in court by NUMSA and Transform RSA (although the latter two entities were no longer formally involved in the court proceedings).  Their agenda was clear: to try to put a stop to the IPP programme.  The IPPs were supported in their opposition by Eskom, NERSA and the Minister of Energy.

CTF sought to argue that the National Energy Regulator of South Africa (NERSA) was required to take a number of decisions prior to the conclusion of the PPAs and had failed to do so.  Consequently CTF argued that the PPAs that had been concluded should be declared null and void and that Eskom should be interdicted from concluding the three outstanding PPAs until NERSA had taken the requisite decisions.  On the day of the hearing CTF conceded that NERSA had in fact taken many of the decisions that the CTF had persisted, for almost two years, had not been taken, but doggedly continued to argue that certain material decisions had not been taken by NERSA. 

The High Court ruling confirms that the PPAs that were signed last year were in fact entered into lawfully and that the 3 remaining IPPs are free to sign their PPAs.  Significantly, any investment that was made after the signing of the PPAs is not under threat and the renewable energy programme in South Africa remains a viable economic opportunity for investors.  Cumulatively this round of the renewable energy programme will result in R56 billion being invested in South Africa, more than 12000 jobs being created and ultimately more than 2200MW of clean energy being added to the grid.  Had the PPAs been signed 3 years ago, which would have been the case but for Eskom's intransigence during the Zuma era, we would not now be facing such serious load-shedding.

The IPPs were assisted in this matter by Michael Evans, Megan Adderley (who drafted the papers and the heads), Deerah Pillay-Lungoomiah and Sikelelwa Ndaliso.  The Webber Wentzel counsel who argued the matter were Wim Trengove SC and Lwandile Sisilana.

Published in Energy and Environment

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