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The Renewable Energy Independent Power Producer Procurement Programme (REIPPP) is making a significant impact on the economy, job creation, community upliftment, economic transformation and climate change, Energy Minister Jeff Radebe told a media briefing.

REIPPP benefits SA

Among other things, in its short eight-year life, the REIPPP has attracted R209.4 billion in committed private sector investment, resulting in much needed alleviation of fiscal pressure. Renewable IPPs have created 38 701 job years for youth, women and citizens from the surrounding communities. This means that 38 701 people had had a full time job for one year. The reason for such a strange measurement was that during construction jobs would ramp up and down. Job years give a measurement in which one could fairly compare outcomes, Radebe said.

He added that local communities had already benefited from over R1 billion spent by IPPs on education such as upskilling of teachers, extra teachers and classrooms, and 600 bursaries to students from disadvantaged communities. In addition, the REIPP brought local communities health facilities and medical staff, social welfare such as feeding schemes, support to old age homes and early childhood development, and support to and establishment of more than a 1000 small enterprises.

Radebe told the media that reports that coal jobs are at risk are true, but that this is not as a result of the REIPPP. “I want to emphasise – the cost of buying from the IPPs is included as an expenditure before the calculation of the EBITDA number, in other words after all operational costs have been paid, including the electricity from the IPPs, but before the payment of interest. Eskom is not borrowing money for buying the electricity generated by IPPs or for funding the construction of the IPPs,” he said.

“Similarly, up to 2018, Eskom has presented annual positive EBITDA margins. It is therefore clear that the financial losses of Eskom cannot be attributable to the introduction of the renewable energy programme.”

According to Radebe, Eskom has not incurred a cent in buying electricity from the Independent Power Producers which they have not been able to recover through the tariff allowance, since 2013. “A peek at the financial statements of Eskom reflects that after deduction of the cost of electricity bought from the IPPs, the EBITDA margin is positive, in other words the earnings (income) before interest payment, taxes, the provision for depreciation and the amortisation of assets,” he said.

“After the first renewable energy projects came on-stream in 2013, Eskom presented an EBITDA number of R26 billion, nearly twice the earnings of the previous year. This points to one thing – Eskom’s financial problems are mostly related to the cost increases, including the increased interest during construction, associated with the delay of the new-build projects, Medupi, Kusile, and Ingula.”

Radebe said we need to embrace that the programme that has done so much for the country and has received international acknowledgement, adding that energy is central to the economy and an enabler in ensuring human rights in respect of access to food and water. “The energy sector is at the cusp of an exciting period, reminiscent of the huge changes brought about by rapid technological advancement in the mobile telephony industry in recent years. We need to be prepared for the disruptive times that the fourth industrial revolution will bring and adjust in a responsible way,” the Minister said.

Image Credit Flickr/GovernmentZA: https://www.flickr.com/photos/governmentza/34539911961

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