Budget Review welcomed by SAPVIA

Adjustment to RE IPP contingent liabilities in the Budget Review welcomed by SAPVIA

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SAPVIA welcomes the work done by Treasury over the last few months around the recalculation of the contingent liabilities attributed to renewable energy IPPs which has been misrepresented to the public by Eskom.

The renewable energy industry has engaged with Treasury officials over the last few months on this matter and we are pleased with the adjustment in the statistical tables of the Budget review. We also note with interest the upward adjustment of Eskom's exposure over the same period.

R millions

2013 / 14

2014 / 15

2015 / 16

2016 / 17

2017 /18

2018 / 19

2019 / 20

Guarantees for Eskom

2016 Budget

125 125

149 944

168 539

190 064

204 932

215 373

2017 Budget

125 125

149 944

174 586

216 199

242 984

264 843

283 542

Guarantees for IPPs

2016 Budget

200 132

200 132

200 132

200 132

2017 Budget

68 345

96 159

113 971

125 766

119 085

112 796

104 114

This is important as the interim Eskom CEO has made a number of disparaging remarks on social media in recent months about the size of the contingent liabilities associated with the IPP programme and the wisdom of Treasury providing such guarantees. This has only been done by Eskom in an attempt to gain larger guarantees for its own ballooning New Build programme and to fund its nuclear energy ambitions.

We also commend his words of warning and recognition of the obstructive nature of Eskom's actions towards the IPP industry and in particular around the implementation of Financial Close for Bid Window 4, the Small IPP programme and the announcement of preferred bidders for the Expedited Round. Eskom's continued delays on signing Budget Quotes for the connection of IPPs not only undermines the REIPPP programme as one of South Africa's key FDI attractors, but also further endangers the livelihoods of local IPPs and manufacturers.

SAPVIA looks forward to the political commitments made to the renewable energy industry by the President in SONA and the Minister of Finance in the Budget Speech being converted into executive actions in the next few weeks.

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