Electricity and Energy Minister Dr Kgosientsho Ramokgopa has again rebuffed allegations of a conflict of interest in the selection of independent power producer (IPP) Mulilo as a preferred bidder during the recent public procurement of battery energy storage systems (BESS) at pre-selected substation sites.

Besides defending the integrity of the BESS procurement process overseen by the IPP Office during a nearly four-hour meeting of the Portfolio Committee on Electricity and Energy on June 26, the Minister also responded to questions posed by members of Parliament from the uMkhonto weSizwe Party and Economic Freedom Fighters during a plenary session in the National Assembly later that afternoon.

The two opposition parties have alleged that the award to Mulilo is improper, owing to the fact that its chairperson, Jan Oberholzer, had been COO of Eskom only months before being appointed to his current position and the launch of the BESS bidding rounds. Oberholzer left Eskom in July 2023 and was appointed Mulilo chairperson in September.

The IPP Office has overseen three bid windows for the technology, with the first launched in March 2023, the second in December 2023 and the third in March 2024.

Mulilo, which is a South African-owned IPP, initially partnered with EDF during the first bid window, but was the lead projects sponsor in the subsequent two bid windows and four of its projects were selected as preferred bids during the latest bid window, awarded in May.

Of the 18 BESS projects awarded across all three BESS bidding rounds, Mulilo is participating in 12, including nine as the lead sponsor, where the combined investment value of the projects is R14.6-billion.  

In a presentation to the portfolio committee, an in-depth explanation was provided regarding government’s decision to procure BESS capacity at substation sites selected by the National Transmission Company South Africa in the Northern Cape, the North West and the Free State.

The presentation showed that a total of 1 744 MW/ 6 979 MWh of BESS capacity had been procured across the three bid windows in line with the 2019 edition of the Integrated Resource Plan and Ministerial determinations published in 2020 and 2023 to address grid congestion, as well as to provide ancillary services to the system operator.

The tenders were evaluated based on a 90:10 scorecard, with 90% based on price and 10% on economic development criteria, and included a stipulation of at least 49% South African ownership and 40% black ownership in the special purpose vehicles developing the projects.

The IPP Office has a well-established bidding framework and the evaluation of bids is conducted by independent transaction advisers and the outcomes reviewed for compliance by an independent chartered accounting firm.

In addition, bidders are required to submit a declaration of interest, including whether any of its directors are listed on the National Treasury’s database as companies or persons prohibited from doing business with the State, listed on the register for tender defaulters, have been convicted by a court of law, or are regarded as politically exposed persons.

In the presentation, it was confirmed that Mulilo provided a specific disclosure on the role of Oberholzer as the former COO of Eskom Holdings.

The company’s bid responses were assessed for compliance with the request for proposals (RFP), including by the independent legal transaction advisers, which concluded that there was “no basis to disqualify” Mulilo.

Ramokgopa reiterated this position in the plenary, where he also stressed that Eskom was not directly involved in the procurement of IPP capacity, despite being the ultimate buyer of the energy.

He said that Mulio had complied with the requirements of the RFP, had disclosed the role that Oberholzer played at the company, as well as his previous role at Eskom, and there had been no legal finding of a conflict of interest.

“I want to repeat, if there is any evidence [of a conflict of interest] bring it to our attention,” he said, reiterating that no such evidence had as yet been provided.