Carol Paton Editor at Large

Government will "renegotiate" contracts with companies that won the first two rounds of SA’s renewable energy procurement to alleviate pressure on Eskom and electricity tariffs, public enterprises minister Pravin Gordhan said. The renewable independent power producer (IPP) programme has become controversial politically, with trade unions, the EFF and former Eskom officials claiming that the costs are responsible for the financial collapse of Eskom, which cannot service its debt of more than R400bn. However, the move to renegotiate contracts could be damaging for future investment as investors will be asked to forego earnings. IPP contracts have also been sold into a secondary market as their guaranteed revenue streams are attractive to institutional investors. The programme is one of SA’s most successful attractors of investment, raising R190bn over five years. The first two rounds of procurement in 2011 and 2012 were significantly more expensive than subsequent rounds, for which pr...

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