Eskom, REIPPPP delays, and the cost of blocking SA’s renewable energy transition: Sindile Vabaza

Key topics:Eskom leadership blocked renewable PPAs under Molefe and KokoREIPPPP delays stranded R50bn investment and 26 preferred biddersRenewable delays worsened load shedding, raising costs and tariffs.By Sindile Vabaza*.With the current law firm court case (over BEE regulations) being heard at the Gauteng High Court in Pretoria, I thought it would be interesting, for posterity’s sake, to go down memory lane to that other time when former Eskom CEO Brian Molefe and former Head of Generation Matshela Koko sabotaged renewable energy projects that not only destroyed black businesses that they often professed to want to help, but also cost the taxpayer a boatload of money.Launched in 2011, the Renewable Energy Independent Power Producer Procurement Programme (REIPPPP) was hailed as one of the most progressive economic transformation tools in the world. Yet, between 2016 and 2022, a deliberate campaign by former Eskom executives effectively strangled that lifeline, halting black industrial progress and forcing taxpayers to pay a crippling price.The trouble surfaced in mid-2016. Despite a government mandate to procure cheaper energy from independent producers, Eskom—led by then-CEO Brian Molefe—simply refused to sign the necessary Power Purchase Agreements (PPAs).In May 2016, Molefe famously told Parliament that renewable energy had “disappointed” and was still a decade away from reliability. In reality, the technology was already cheaper than Eskom’s new coal plants. He followed this with a leaked letter stating he would no longer support new renewable projects.When then-Finance Minister Pravin Gordhan pushed back, Molefe doubled down. He was backed by Matshela Koko, who launched a social media offensive. In one August 2016 tweet, Koko declared: “If I had the privilege of being a director of Eskom… I will not sign these IPPs now. There is no logic.”Investigators later noted that this coordination suggested “an orchestrated and carefully considered campaign” to protect the coal monopoly.The most startling consequence of this stalling was the destruction of the black-owned businesses which the government regularly invokes when trying to garner black votes. The REIPPPP had been admittedly a rare success story in state transformation. By the time the delays began, the programme had already channelled roughly R85 billion into the hands of black investors and entrepreneurs..Left in limbo.Because Molefe and Koko refused to sign contracts for the fourth bidding round, 26 preferred bidders—representing R50 billion in investment—were left in limbo. These were not foreign giants; they were emerging black industrialists who had secured funding and were ready to build. The freeze effectively halted the “deracialisation” of the energy sector, slamming the door on the very entrepreneurs the government claimed to support.While publicly fighting renewables, Koko was privately embroiled in corruption. The Zondo Commission later found him instrumental in facilitating the Gupta family’s takeover of Optimum Coal Mine: a deal that cost Eskom billions.Koko’s tenure was also marked by scandal regarding his stepdaughter’s company, Impulse International, which netted close to R1 billion in Eskom contracts. When Koko faced a disciplinary hearing, his legal team produced a memo allegedly signed by Molefe declaring a conflict of interest. Critics charged that the memo was “manufactured after the fact,” a piece of theatre to cover up a massive conflict.While these executives protected their coal interests, the South African grid collapsed. Consultants Meridian Economics calculated that due to the stalling of REIPPPP in 2016, South Africa suffered a seven-year delay in connecting new capacity. The report noted bluntly that the load-shedding experienced during that period “would have been almost entirely avoided” had the programme not been blocked.The financial damage was immense. While renewables had become the cheapest form of energy, Eskom was forced to rely on expensive diesel and malfunctioning coal stations. By late 2022, with the country in Stage 6 blackouts, the energy regulator approved a 38% price hike to bail out Eskom. Taxpayers and small businesses were forced to pay more for a service that was failing, simply because cheaper, cleaner energy had been unlawfully suppressed..Coal interests.Although the direct actions were taken by Molefe and Koko, they operated with the blessing of the coal lobby, emboldened by figures like Gwede Mantashe. As a vocal critic of the speed of the renewable transition, Mantashe provided the political environment necessary for Eskom to defy government policy. While he may not have signed the letters, his alignment with coal interests gave Molefe and Koko the cover they needed to maintain the status quo.In the end, the trio of actions—Molefe’s refusal to sign, Koko’s public campaign, and the political protection of coal—did not just delay a project. They bankrupted black entrepreneurs, held the economy hostage, and forced South Africans to pay record prices for darkness.What is the lesson here?Well, besides the obvious case of the ANC-controlled government systematically enabling thieving liars as a matter of course, it seems that for the government, transformation is a convenient tool to be whipped out at any point to feather the nests of connected friends and patronage and stir up political feeling.Do with this information what you will..*This article was originally published by The Daily Friend and has been republished with permission. .*Sindile Vabaza is an avid writer and an aspiring economist..Sign up for your early morning brew of the BizNews Insider to keep you up to speed with the content that matters. The newsletter will land in your inbox at 5:30am weekdays. Register here.Support South Africa’s bastion of independent journalism, offering balanced insights on investments, business, and the political economy, by joining BizNews Premium. Register here.If you prefer WhatsApp for updates, sign up to the BizNews channel here.

Eskom, REIPPPP delays, and the cost of blocking SA’s renewable energy transition: Sindile Vabaza

Key topics:

Related Stories

Despite court defeat, govt still wants to steal your healthcare

Electricity price relief on the horizon for South Africa

Please Call Me's Makate goes to war with former funders over Vodacom payout share

BNC#8 Mteto Nyati Q&A - Power, politics, and the fight to keep South Africa’s lights on