Signing power producers agreements with IPPs will be “financial suicide” for Eskom

A lawyer for the National Union of Metalworkers of South Africa (NUMSA) argued in the North Gauteng High Court on Tuesday that the signing of a deal by power utility Eskom with 27 independent power producers (IPPs) may be financial suicide.

Numsa, along with Transform RSA, asked the court to grant an interdict against the minister of energy, Jeff Radebe, to stop him from signing the renewable energy contracts. The signing of these contracts, which was to have taken place earlier this month, was put on hold after Numsa and Transform SA instituted a last-minute court bid.

The Department of Energy has previously said it expected the signing of the agreements to go ahead as soon as the court matter was finished.

On Tuesday advocate Nazeer Cassim, for Numsa, told the court that some might view the signing of the renewable energy contracts a form of economic looting. He added that Eskom was already broke and that tax payers would have to foot these bills if things didn’t go as planned. “We are trying to avert a disaster,” he said.

Cassim said there already was an application by the Coal Transporters Forum to have the IPP agreements nullified. He asked that an interdict stopping the signing of the agreements be granted, until that application was dealt with.

He also told the court that the application by the Coal Transporters Forum would deal with arguments that the IPPs didn’t comply with statutory frameworks and that there was no public participation.

Advocate Barry Roux, for Eskom, argued that the parastatal’s financial situation could not be a reason to grant an interdict. Roux said that a court could not grant an interdict against the signing of the IPP agreements without first reviewing and setting aside the minister of energy’s determination in terms of the Electricity Regulation Act.

Advocate Wim Trengove, for the IPPs, said that all due processes had been followed by the National Energy Regulator (Nersa) before they were entered into. He said that the applicants could not argue that the procedures behind the granting of the IPPs were flawed until they brought an application to have these procedures reviewed.

Judge Dawie Fourie is expected to deliver judgment on Thursday 29 March 2018.

Acknowledgement

This article was first published by Fin24 and is republished here with permission.

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