The Department of Mineral Resources and Energy (DMRE) has confirmed the “postponement” of the signing of power purchase agreements (PPAs) for projects selected as part of the controversial Risk Mitigation Independent Power Producer Procurement Programme.

A signing ceremony was expected to take place in Pretoria on Thursday, March 31; the already delayed deadline for the projects to reach financial close.

Eleven projects, including three gas-fuelled powership projects, were selected last year, with an initial financial close deadline of July 2021.

That deadline was extended initially to the end of September last year, then to January this year and later to the end of March.

No new deadline was provided.

The DMRE has confirmed with Engineering News that the March 31 ceremony was postponed “due to outstanding matters and conditions to be addressed in respect of the PPAs with Eskom, and the need to provide the preferred bidders and their lenders adequate time to undertake due diligence reviews of the project agreements”. 

It did not elaborate on the outstanding matter, but Eskom has previously raised concerns over the lack of clarity on the maximum price methodology for gas.

“Consultations with the buyer, Eskom, are under way.

“A new date for the signing of PPAs will be communicated to the affected parties in due course,” the DMRE said in response to an enquiry.

The department also referred to a statement made by Minister Gwede Mantashe during the debate on President Cyril Ramaphosa’s 2022 State of the Nation Address (SoNA), which committed the department to concluding the PPAs for the project.

In his SoNA, Ramaphosa announced that only 800 MW of the nearly 2 000 MW in projects selected were ready to proceed.

This raised speculation that PPAs for the three powership projects – which comprised 1 200 MW of the 1 996 MW being procured and which have faced environmental authorisation, legal and licensing challenges – were unlikely to be signed by the end of March.