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Construction on REIPPP Renewable Energy Projects permitted to resume

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Construction on REIPPP Renewable Energy Projects permitted to resume

18th May 2020

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The regulations issued pursuant to the Disaster Management Act, 2002 (the “Regulations”) restricted the operation of a number of industries in an effort to curb the spread of the COVID-19 virus within South Africa.  The Regulations issued in respect of Alert Level 4 brought with them much uncertainty as to whether construction could continue on the renewable energy projects currently being developed pursuant to Renewable Energy Independent Power Producers Procurement Programme (“REIPPP”). In particular, the Regulations, which outlined the easing of the lockdown restrictions to Alert Level 4, vaguely allowed for the resumption of “civil engineering services for public works projects (including water, energy and sanitation)” along with “public works civil engineering and construction works” (see Part D of Table 1 of the Regulations issued on 29 April 2020).

This has now been clarified with the publication of the latest directions issued under the Regulations which are intended to provide guidance on the implementation of the Regulations. In terms of the Government Notice No. 542 published on 15 May 2020 by the Minister of Mineral Resources and Energy, certain civil engineering activities for public works have now been permitted to recommence during the lockdown period, but only insofar as such civil engineering activities relate to energy. The Minister has clarified civil engineering for public works activities that are allowed to resume specifically includes, amongst others,  projects procured under REIPP that are currently in construction. In addition, the following services are also expressly permitted:

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  • all professional entities that provide licences, approvals and authorisations for the maintenance and construction of energy projects;
  • all professional planning, costing and design work that supports construction work on sites, in anticipation of incremental work on construction sites;
  • contracted suppliers, contractors and consultants who need to travel across borders to attend to projects; and
  • energy construction work for already priced and awarded government tenders.

Therefore, the construction on the REIPPP projects currently being developed that had been halted due to the Regulations, and the uncertainty surrounding these, may now resume.

Written by (Fasken):

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Ashen Jugoo is a leading projects, finance and energy lawyer in South Africa and leader of the region’s Finance and Projects team. With extensive experience in project development, project and infrastructure finance and corporate finance, he also advises lenders and sponsors on public-private partnerships.

Leveraging his expertise in infrastructure development in the mining, telecommunication, transport, power and energy and information technology areas, he has advised clients on numerous cross-border projects in Africa, including mining, energy, and telecommunication projects.

Ashen advises on all aspects of limited recourse financing and has expertise in engineering, procurement and construction. In this area, he has advised on EPC/EPCM, operation and maintenance agreements, technical service agreements, power purchase agreements, and related legal services as relates to project financed transactions.

Clients praise Ashen in being “extremely pro-active in that he anticipates and provides solutions in reaction to problems on a transaction for us to consider instead of asking our thoughts on a problem - this is very valuable as most lawyers often want lenders to come up with solutions which they can then advise on”.

Shadi Kekana is in the Project Finance team in Johannesburg advising clients in both the public and private sectors and spanning diverse industries including finance, health, property, transport, telecoms, retail and regulatory authorities.

With a particular interest and experience in aviation finance, asset finance, structured finance along with leveraged and acquisition financing, Shadi has advised domestic and foreign financial institutions, and other multi-national companies, in relation to various banking and finance transactions

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