Johannesburg - Hundreds of jobs in the country’s renewable energy sector are set to be axed following delays by state-owned power utility Eskom in signing power purchase agreements (PPAs).
Wind towers producer GRI Wind Steel SA, located in the Western Cape, has started the process of retrenching staff. This after having been embroiled in an indefinite strike, following protests by its employees over an alleged unilateral switch of work shifts and no payment for overtime work.
GRI plant manager Daniel Mora said the retrenchments were as a result of Eskom’s perceived delay in signing PPAs.
More than 200 of its employees are set to be axed.
“The retrenchment process will be facilitated by the Commission for Conciliation, Mediation and Arbitration,” said Mora.
The 12 000m² wind tower mast production facility is situated on the West Coast, in the Green Technology Industrial Park in Atlantis, about 40km north of Cape Town.
Construction of the R300m facility was completed in 2014 and GRI became the first to benefit from the City of Cape Town’s pilot Investment Incentive Scheme in Atlantis.
The scheme involves fast-tracking the granting of access to land owned by the City of Cape Town and the quick approval of land-use and building application plans.
GRI had aimed to supply more than 150 wind towers a year. Mora said the company had embarked on a “serial” production of wind towers in January 2015, and had never thought of laying off employees until Eskom failed to commit to signing the PPAs.
Sidwell Medupe, spokesperson for the Department of Trade and Industry, said that the Eskom delay in signing the PPAs would hit renewable energy production investments, component manufacturing and services to the sector as well as jobs.
The staff facing retrenchments are represented by the Association of Mineworkers and Construction Union (Amcu).
Amcu shop steward Eben Jansen said the company informed it about the retrenchments this week, while workers were striking.
He said the union had invoked section 189(A) of the Labour Relations Act, which requires that consultations must be held when the employer contemplates retrenchment.
“The company has informed us that it wants to retrench 260 people out of 340. It is not the final total, but that is its intention,” said Jansen.
“It’s very sad,” he added.
The uncertainty in this sector is happening at a time when Trade and Industry Minister Rob Davies recently issued a gazette notifying interested parties of his intention to designate Atlantis a special economic zone (SEZ) for green technologies.
A public hearing session is set to take place on Wednesday.
GreenCape, a nonprofit organisation established by the Western Cape government to support the development of the green economy in the region, submitted a joint application to Davies to designate Atlantis an SEZ.
Once operational, the Atlantis SEZ will become a supplier and component manufacturer for the renewable energy sector – in particular, IPPs in the state’s Renewable Energy IPP Procurement Programme (REIPPPP).
The dti’s Medupe said the holdon the signing of the PPAs would delay or see renewable Atlantis SEZ investments lost.
The proposed Upington SEZ, which will service the renewable energy sector in the Northern Cape, would take the biggest hit from the delayed PPAs, he added.
Commenting on the unsigned PPAs, GreenCape CEO Mike Mulcahy said the delays in concluding the projects put GRI and all the other manufacturers of components for the REIPPPP under huge pressure.
“The Coega Development Corporation, which operates the Port Elizabeth-based Coega Industrial Development Zone, has shut its facility. In the East London Industrial Development Zone, photovoltaic manufacturer Helios has not produced for the local market. In Atlantis, GRI is under tremendous pressure,” said Mulcahy.
“Supplying wind towers to this REIPPPP market is why [manufacturing and engineering company] DCD and GRI were set up. These delays in signing PPAs have direct consequences on their ability to stay open,” he said, adding that the City of Cape Town was trying to sign contracts directly with IPP to buy renewable energy, and had dragged Minister of Energy Mmamoloko Kubayi to court for this purpose.
“If the City or other metros were to succeed in directly contracting with utility-scale wind and solar farms, it would directly benefit the manufacturing that has been set up in Atlantis, East London and Coega,” he said.
Brenda Martin, CEO of lobby group the SA Wind Energy Association, said the effects of not signing the PPAs were far-ranging in terms of job losses across the value chain.
She said the delay had also resulted in a loss of investor confidence.
“Apart from these direct losses, the more than 15 000 jobs that selected bidders have legally committed to creating, and the investment value of an estimated R68bn, have not yet been realised.
“The impact is immense, both in terms of losses experienced by South Africans who anticipated full-time employment and increased opportunities associated with a flourishing renewable energy industry, and in terms of all of the unrealised potential,” said Martin.
She said the projects in the sector would generate R13.4bn in socioeconomic and enterprise development expenditure into surrounding communities over their 20-year lifetimes.
They would also distribute R6bn in dividends to local community shareholder groups.
“Signature of the PPAs would signal to South African citizens and to global investors that the country is committed to renewables as part of its long-term energy mix. The resulting policy confidence will encourage citizens seeking government leadership, and stimulate investment in domestic manufacturing, which has currently stalled,” she said.
Jolene Henn, spokesperson for Eskom in the Western Cape, referred all questions to the department of energy “as they are currently busy facilitating the process”.
She said the department would revert to Eskom at the end of the month.
Nomvula Khalo, spokesperson for the energy minister, said the assertion that Eskom was refusing to sign the PPAs was incorrect, adding that the deadlock had been resolved.
“Minister Kubayi announced on September 1 that Eskom would sign PPAs for Windows 3.5 and 4 by the end of October,” said Khalo.
“In this regard, there is a process to negotiate tariff levels with independent power producers in these windows aimed at bringing down the tariff to 77c a kilowatt.”
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