IPP projects remain attractive funding opportunities

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The recent appointment of Jeff Radebe as new South African Energy Minister provided some promise that the uncertainty surrounding the Renewable Energy Independent Power Producers Programme (REIPPP) would be resolved. 

The industry received a strong boost with the Radebe announcing that the 27 outstanding REIPPP projects from bid windows 3.5, 4 and 4.5 will be signed off on 13 March 2018. (The signing of 27 renewable energy agreements in South Africa has been halted till further notice).

The signing process will culminate in Eskom signing Power Purchase Agreements (PPA’s) with the 27 projects.

Although Eskom was not present when the Minister made the announcement, its spokesperson confirmed that a resolution to sign the PPA’s were taken at an Eskom Board meeting which was taking place at the time the Minister was making the announcement.

Concerns were previously raised about the average tariffs at which the PPA’s would be signed, with both both Eskom and relevant ministers indicating during 2017 that the PPA’s would only be signed at an average tariff of 77c/KWh.

It has now been confirmed that the average tariffs at which the PPA’s would be signed are 86c/KWh. The signing is expected to unlock ZAR56 billion of new investment and create 61 600 full-time jobs over the next few years, which has been mired in uncertainty since April 2015.

This announcement will provide renewed positivity and momentum into the REIPPP programme. 

We however continue to believe that the early round projects remain attractive funding opportunities to investors due to the following:

  • Projects benefit from higher tariffs resulting in more financial flexibility in the event of problems occurring during the term of the PPA;
  • The projects are operational therefore no construction risk is present;
  • As the projects are operational, investors are able to fully deploy investments rather than be exposed to a partial drawdown process during the construction period;
  • The projects have commenced capital repayments on its loans thereby resulting in investors receiving coupon and capital payments on a regular basis.

Corneleo Keevy, Ashburton Investments Head of Credit Risk Management 

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Thabo Mphahlele is the BizNis Africa Head of Sales and Marketing. Mphahlele was previously MultiChoice Production Support Analyst responsible for developing and monitoring applications. In addition, Mphahlele develops and automates batch scripts and is responsible for the daily infrastructure maintenance at MultiChoice. As a Production Support Analyst, he is responsible for incident analysis solving , developing and constructing business reports for SQL and Oracle and implement change controls for the business. Additional responsibility includes monitoring system performance via SOA, Kibaba (Elasticsearch), H.P BSM, HP Sitescope. Mphahlele is responsible for creating infrastructure performance reports through HP Ops Analytics, monitoring payments via Splunk and in-house built-in tool and disaster recovery simulation and testing. At Nashua Mobile, he was responsible for application development and enhancing the web sites At South West Gauteng College, he was the IT Technician and Network Administrator. During his tenure at Double Digit Media, he was he focused on application and web site development for new and existing clients Mphahlele contributes as a Content Manager for BizNis Africa.

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