Banks refuse to fund emergency power until court case is complete
A court case filed by a losing bidder in South Africa’s emergency power programme threatens to delay the provision of the electricity by months as banks balk at providing funding because of the risk of an adverse judgment.
Officials at three of the seven preferred bidders selected to provide power by August 2022 said the lenders are refusing to sign off on the projects until the court case is complete. They asked not to be identified because the talks are confidential.
The case filed in South Africa’s High Court by DNG Energy Ltd., which alleges corruption by government officials, was earlier this month postponed until Nov. 30.
The deadline for financial close of the projects proposed by the seven preferred bidders has been set at Sept. 30 by the government, already a delay from an initial July 31 requirement.
The delays mean there will be little imminent relief from intermittent power cuts imposed by state utility Eskom Holdings SOC Ltd. The outages have hindered the performance of the South African economy and damaged investor confidence since 2005.
In addition to Turkey’s Karpowership, which secured about 60% of the contracts to provide 2,000 megawatts of electricity, the winning groups include some of the world’s leading energy companies. TotalEnergies SE, Electricite de France SA, Scatec ASA and ACWA Power are all involved.
DNG has, in its court documents, demanded that it replace Karpowership as a preferred bidder and had earlier attempted to have all the other bidders interdicted from reaching financial close. It later dropped the second demand.
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