IPP Office confirms ongoing dispute with 13 projects over payment of bid bonds

The head of South Africa’s Independent Power Producer Office (IPPO) has confirmed that it has called the bid bonds for 14 projects that failed to advance to commercial close during the fifth bid window (BW5) of the country’s renewables procurement programme.

Bernard Magoro told lawmakers this week that one preferred bidder had agreed to pay the bid bond, but that the other 13 were still the subject of a legal dispute.

In a presentation to the Portfolio Committee on Electricity and Energy, Magoro said that 11 of the 25 projects selected as preferred bids during BW5 had achieved commercial close and that projects with a combined capacity of 1 159 MW were under construction.

“Fourteen of the projects did not reach financial close and we are busy winding down.

“The department has already terminated their preferred-bidder status and we have subsequently called the bid bonds on these 14 projects,” Magoro said.

In response to an Engineering News enquiry, the IPPO confirmed that the bank that had issued a preferred-bidder guarantee for the Total Mulilo Du Plessis PV1 project had paid the department based on the calling of the guarantee.

It also confirmed that the Engie-Pele Sannapos Solar PV Consortium was legally contesting the payment of the bid bond for its BW5 project, while the consortium of Globeleq-Mainstream SA Renewables Power was contesting payments in relation to the six solar PV projects and six onshore wind projects selected as preferred bidders during the round.

A total of 2 600 MW was allocated for procurement from wind and solar PV technologies during BW5, which was affected by supply-chain disruptions associated with Covid lockdowns and a spike in energy prices that followed Russia’s invasion of Ukraine in February 2022.

The IPPO told Engineering News previously that the two consortia had initiated their legal challenges in October, and were seeking to “prevent a payout by ABSA Bank of the preferred bidder guarantees”.

The IPPO also confirmed its intention to oppose both cases.

Meanwhile, Magoro also announced that the department had terminated the five projects, including the Karpowership projects, which did not achieve financial close under the risk-mitigation programme and that government had “retained the preferred bidder guarantees”.