Government to ensure bidders for electricity supply meet necessary requirements

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Government says it will ensure that all preferred bidders for its Risk Mitigation Independent Power Producers Procurement Programme meet the necessary requirements. The aim of the programme is to supply electricity from a diverse range of energy sources, including green energy such as solar and wind.

Government says South Africa has an abundance of sunlight and wind resources and has the potential to be a leader in battery manufacturing to store green energy. The Energy Department had selected 11 preferred bidders for the generation of various energy projects, including wind and solar.

About 1 845 megawatts of electricity are expected to be produced under the energy programme. This, coupled with the injection of about R45 billion into the South African economy by the private sector according to the department.

Requirements for bidding 

It says an average of 50% of the local content is expected during the construction period. The department’s Bernard Magoro explains the process required from the eleven bidding companies before they can qualify.

“The qualification stage is a passed-off fail. So, we have got a list of requirements based on those four disciplines. If a bidder failed on any of them, we have just listed a few here. For example, the minimum 49 % South African entity participation. If a bidder does not demonstrate that there is 49 %  shareholdership by South Africans, that bidder is immediately disqualified.”

The participation of South African companies in these projects is set at 51%, with black ownership at 41% according to Magoro.

“So the next stage is then where we rank the bidders based on price which counts for 90% and the cheapest or the bidder who offers the cheapest price gets the maximum price. And then all the other bidders as we start going up the merit order -they then get allocated points relative to the cheapest bidder.”

Deadline for bidders

With the deadline of the bid submission expected at the end of the month, all bidders have been advised to submit their plans on time.

“The requirements are that all the 11 bidders have to meet financial close, if any of them don’t meet financial close by the set date, what happens is that the bidder fails to reach the contractual agreement. So, we are not going to sign the agreements with those bidders. So, all of them are expected to achieve the financial close and all the outstanding requirements.”

Transparency of the bidding process

Meanwhile, Mineral Resources and Energy Minister Gwede Mantashe has rejected claims that the bidding process was not transparent.

“All those processes were transparent and open and have access to the public to actually interrogate. As far as I am concerned the process was correct and transparent with all checks and balances. That’s my answer. I am repeating it.”