Currently, there are no major law suites pending, which pertain to projects procured under the Renewable Energy Independent Power Producers Procurement Programme (REIPPPP), owing to the transparent and credible nature of the tender process, Law firm Edward Nathan Sonnenbergs (ENS) director and head of projects and projects finance department Eric le Grange tells Engineering News.
He points out that the issue of corruption is firmly addressed in the implementation agreement, which includes clauses on imposing heavy penalties and the possible immediate termination of agreements if any form of corruption is committed.
He says the REIPPPP has to comply with many laws, such as those pertaining to land rights. Most of the REIPPPP projects are built on farmlands, so the clauses dealing with subdivision in the Agricultural Land Act have to be complied with. The Act states that agricultural land cannot be subdivided unless consent is given by the Minister of Agriculture, Forestry and Fisheries.
"Government does not want to cut up agricultural land into uneconomical pieces; therefore, even if a person has a long term lease over certain portions of agricultural land, the lessee will need the Minister's permission," explains Le Grange.
The REIPPPP is also affected by the Mineral and Petroleum Resources Development Act (MPRDA) because the consent of the Minister for Mineral Resources is required in respect of any development which may be contrary to the use of issued mineral rights for a particular area in future.
Other laws, which impact on REIPPPP projects, include the National Heritage Act, the National Environmental Management Act, the Water Act, local regulations, civil aviation regulations, communication regulations, provincial and municipal regulations, as well as general government regulations.
He points out that REIPPPP projects, in some instances, can require more than 20 individual approvals and permits to be implemented. He applauds government for fast-tracking what could have been an even more laborious process, as it could easily have taken longer had there not been a proactive will on the part of government.
ENS has been involved with the groundwork of the REIPPPP since 2010 and Le Grange notes that problems around the procurement of additional electricity generation capacity by government existed before the advent of the programme. "There was not a fully developed regulatory environment for independent power producers (IPPs) in place or a framework as to how or to whom IPPs would sell their electricity," he says.
In 2010, the firm received a request from National Treasury to assess the regulations issued under Section 34 of the Electricity Regulation Act.
Section 34 empowers the Minister of Energy to conduct electricity procurement programmes, which will provide additional electricity capacity to enter the market. This additional capacity is procured by the Department of Energy (DoE) and bought by an entity designated by the DoE as the purchaser.
ENS and law firm Webber Wentzel, advised on the redrafting of regulations, now known as the Electricity Regulation on New Generation Capacity, which was published for comment in November 2010. The final version of the Electricity Regulations on New Generation Capacity was promulgated on May 4, 2011.
These regulations provided the basis for government to launch the IPP programme on August 3, 2011.
Initially, there were many gaps and inadequacies in the regulations, as they were based on procurements, as opposed to broader project procurement.
ENS lawyers are working with the various government departments involved in the REIPPPP, such as National Treasury and the DoE, and with private-sector bidders and the financial institutions to ensure legal compliance of all REIPPPP projects.
Previously published by Engineering News online, 28 June 2013.
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