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Court action delays IPP contract signing

Publish date: 20 March 2018
Issue Number: 548
Diary: Legalbrief Environmental
Category: General

An ideological clash has become evident in the ongoing dispute between coal workers and government over the delayed signing of 27 REIPPP agreements last week, writes Legalbrief, as roleplayers fight to define what a South African just energy transition will look like. Government and Eskom were unable to sign contracts with 27 independent power producers (IPPs) last week as planned after the National Union of Metalworkers of SA (Numsa) and Transform RSA took the matter to the Gauteng High Court (Pretoria). Energy Minister Jeff Radebe undertook not to sign the agreements until the matter has been given a full hearing by the Gauteng High Court (Pretoria) on 27 March, notes Legalbrief. ‘Numsa believes the signing of these contracts would be detrimental for the working class of Mpumalanga and the country as a whole. The signing of the IPP means that Eskom will require less coal-fired electricity. This is likely to lead to the closure of the coal-fired power plants and the impact will be that at least 30 000 working class families will suffer because of job losses,’ the union said, according to an eNCA report. Numsa also claims the IPP roll-out will cause a dramatic spike in the price of electricity because IPPs are more costly than coal-fired power plants. The solar and wind IPP projects are valued at R56bn and government promised they would create thousands of jobs. But Numsa disagrees. It wants to make representations to Nersa, Eskom and Radebe on the implications for workers and their families.

More on this in POLICY WATCH section (below)

Full eNCA report

Radebe defended the IPP programmes, and complained about ‘a mere one hour notice (given) to the Minister and Eskom as respondents’ in the application, notes Legalbrief. The matter was argued until after 11pm on Monday last week. A TimesLIVE report notes Radebe disputed the outcome‚ saying in a statement: ‘After arguments were concluded‚ the court refused to grant an interim interdict against Eskom or the Minister but instead postponed the matter to 27 March 2018 ... In the absence of an interdict‚ and with the court having expressly informed the parties at court that it would not grant such an order‚ nothing prevented Eskom and IPPs from signing the agreements as scheduled by me for Tuesday‚ 13 March 2018. However‚ counsel for the Minister informed the court that whilst there is no interdict granted‚ the signing will however be postponed until the 27 March 2018 when the matter is finally disposed of in court’. He added: ‘This undertaking was made voluntarily on behalf of the Minister in the spirit of constitutionalism and the rule of law.’ Numsa spokesperson Phakamile Hlubi-Majola told BusinessLIVE however that the union and Transform RSA were granted the interdict. She dismissed the statement issued by Radebe, saying the department had not postponed the signing on its own accord. ‘They were attempting to impose this deal on us without consultation, but we stopped them,’ said the union.

– TimesLIVE

Full BusinessLIVE report (subscription needed)

The SA Wind Energy Association (Sawea) said Numsa and Transform SA's arguments were based on questionable data. A Weekend Argus report quotes Sawea CE Brenda Martin as saying: ‘The attempt to halt conclusion of 27 duly procured Renewable Energy PPAs by Numsa and Transform RSA this week is based on questionable data and does not sufficiently take into account the long-term interests of South Africans.’ She said the closure of Eskom’s older power stations could not be blamed on renewable energy. She added that Numsa’s suggestion that ‘30 000 working class families will suffer because of job losses’ was an error. ‘Publicly available information on Eskom’s power station employment figures show that this figure was overstated by an order of magnitude,’ Sawea said. It rejected Numsa’s claim that IPP roll-out would raise the cost of electricity, saying there was no reliable evidence in support of the claim. ‘The new IPPs will cost substantially less than the cost of Eskom’s new coal-fired power from Medupi and Kusile, and are also expected to cost less than Eskom’s current average sales price of electricity,’ said Martin.

Full Weekend Argus report (subscription needed)

And Numsa has has blasted Greenpeace over its position on renewable energy. A News24 report notes that Numsa took exception to the organisation's call for an accelerated energy transition. ‘With the confidence of the ignorant, Greenpeace is accusing Numsa of sabotaging renewable energy in favour of coal and, in the process, standing in the way of progress. Numsa takes great exception to this kind of wilful misrepresentation of its positions on renewable energy,’ said Hlubi-Majola. Numsa argued that it had a progressive policy on adaptation to climate change and renewable energy, and accused Greenpeace of ‘insulting’ workers. ‘If Greenpeace cared to actually engage us instead of insulting workers and their families, they might realise that, what we are demanding, is that the government must follow the guidelines for a just transition because they give effect to the 2015 Paris Accord, which SA signed up for,’ said Hlubi-Majola. 'Numsa will not be misled into supporting a policy which is potentially disastrous for workers and their families,’ said Hlubi-Majola. ‘Greenpeace seem to be nothing more than cheerleaders for captains of industry who are hell bent on destroying the livelihood of thousands of workers and their families, in the name of so-called sustainable development,’ she added.

Full Fin24 report

The state’s decision to sign renewable energy contracts will lead to a jobs bloodbath, closure of many businesses and will turn several towns in four provinces into ghost towns. According to a report in The Mercury, this is the argument of the parties that wanted to block the Department of Energy from effecting agreements with 27 IPPs. The CTF’s Mpho Mokwana said in a founding affidavit that the signing the IPPs threatened millions of livelihoods. ‘Many towns in Limpopo, Mpumalanga, Gauteng and KwaZulu-Natal that are reliant on coal mining as the pillar of their economies will become ghost towns,’ said Mokwana. ‘Coal mines will close and Emalahleni, Middelburg, Ermelo, Bethal, Belfast, Bronkhorstspruit, Secunda, Groblersdal, Piet Retief, Newcastle, Delmas, Balfour, Standerton, Volkrust, Kinros and Kriel will be reduced to ghost towns,’ he added.The forum was behind a protest that saw trucks shutting freeways leading to Pretoria last year. Truck drivers and owners joined forces to highlight the threat IPPs posed to their jobs and businesses. WWF South Africa, an NGO, said workers already in the sector needed to be reskilled.

Full report in The Mercury (subscription needed)

‘Numsa can be counted among few formations in SA that have developed, and that continue to develop, progressive and class perspectives on Renewable Energy (RE),’ writes Karl Cloete, Numsa deputy general secretary, in a Daily Maverick commentary. ‘Although renewable energy is necessary, there is nonetheless nothing inherently progressive about the sector in terms of its labour practices, which can be as exploitative as any other sector,’ he notes. ‘Our commitment to RE was clear and is a matter of record. However, we were and remain committed to a socialist vision of RE, not a capitalist vision,’ he states. ‘The renewable energy being produced through the REIPPP is not meant for those who do not presently have access to electricity but is being developed for big corporations which get their supply at a discount,’ he warns. ‘For these reasons Numsa is of the firm conviction that the building of a Socially Owned Renewable Energy Sector in SA is the best possible option for our country’s energy needs,’ he writes. ‘We are in full support of a transition from dirty energy to clean renewable energy. Where we differ with the ANC Government is on the nature of the transition. We are against a capitalist transition organised around profit and exploitation. We are for a just and democratic transition towards socially owned renewable energy that achieves cleaner forms of energy, develops the manufacturing base of our economy and avoids job losses and provides reskilling.’

Full Daily Maverick commentary

The ongoing drama around the REIPPs is a clear sign that unless the concerns from all sectors are incorporated into national energy planning from the outset, we will not progress towards a socially equitable and environmentally sustainable energy sector, warns Richard Halsey, a researcher at Project 90 by 2030. ‘The fact that jobs are threatened in the coal sector does not provide a social licence to perpetuate an industry that causes significant harm when less harmful options (such as RE) are available,’ he argues in an analysis on the Daily Maverick site. ‘Therefore, a Just Energy Transition will need to deal with aspects such as reskilling workers, finding alternative employment opportunities and adequate compensation, to name a few,’ he states. ‘While the signing of REIPPs could mean some Coal Fired Power Stations (CFPSs) close a bit earlier, they are all going to close anyway. Eskom has a decommissioning schedule for closing power stations as they near end of life. A number of the existing fleet are already due to be have been closed, or have been brought back online after being mothballed and are on borrowed time,' Halsey notes. 'So while it is a political move to blame the REIPPs, closure of CFPSs was always on the cards, which is why it is important that organisations with the interests of coal workers at heart must think long term. A JET plan is better for the future for coal workers than just delaying the closures for a few years and then having nowhere to go,’ he warns. ‘Hopefully the Just Transition Dialogue Series being run by the National Planning Commission can help rectify this,’ writes Halsey.

Full analysis on the Daily Maverick site

In an open letter on the groundWork site, the Life after Coal movement writes of last week's REIPPP signing delay: 'South Africans deserve to be supplied with the cheapest, cleanest electricity available. We therefore firstly call on government to sign the power purchase agreements for the current 27 renewable energy projects as planned. These projects represent only 1.5% of electricity supply, taking the total contribution of renewable energy to electricity supply to just under 5%. Secondly, we call on government and unions to start an urgent, broad-based consultation process to design appropriate measures to prepare the country for the transition away from coal – that is accelerating at a global scale – with a particular focus on support for workers in the coal industry,' the movement concludes.

Full report on the groundWork site

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