Mainstream/Globeleq consortium ordered to pay IPP Office R164.8 million in outstanding bid bonds for six failed REIPPPP BW5 wind projects – Green Building Africa

• The High Court has ruled in favour of a renewable energy developer seeking to block the payout of bank guarantees linked to six solar projects under South Africa’s Renewable Energy Independent Power Producer Procurement Programme (REIPPPP) Bid Window 5, but declined to extend the same protection to the company’s six onshore wind projects.
• The Ikamva Consortium, led by Mainstream Renewable Energy and comprising Globeleq, Africa Rainbow Energy & Power, H1 Holdings, and local community trusts, is required to pay R164.8 million to the IPP Office.

The case stems from a 2021 bidding round under the REIPPPP Bid Window 5 , in which the Ikamva Consortium (applicants) were appointed as preferred bidders for 12 projects, six onshore wind and six solar, following a Request for Qualification and Proposals issued by the Department of Mineral Resources and Energy (the second respondent).

As part of the bid requirements, preferred bidders were required to lodge bank guarantees of R200,000 per megawatt of capacity. The applicant’s total guarantees, issued through its bankers ABSA (the first respondent), amounted to R254.8 million — R164.8 million for the wind projects and R90 million for the solar projects.

Following the applicant’s failure to meet certain conditions to reach “commercial close,” the department terminated its preferred bidder status on 1 October 2024 and called on ABSA to honour all 12 guarantees. The applicant then approached the court to interdict the bank from making payment, arguing that the guarantees had already expired.

In his judgment, the presiding judge found that the guarantees relating to the solar projects had indeed expired on 30 June 2023, as the Bid Validity Period defined in the agreements had lapsed. The department’s failure to call on those guarantees before that date rendered them unenforceable. The court therefore granted an interdict preventing ABSA from paying out the guarantees for the six solar projects.

However, the court reached a different conclusion regarding the onshore wind projects. Because no Implementation Agreement had been signed for these projects, the judge held that the Bid Validity Period had not yet expired and that the guarantees remained valid. The interdict was therefore refused in respect of the wind projects, allowing the department to proceed with its demand for payment.

“The guarantees in respect of the onshore wind projects remain extant and valid and were so when they were called up,” the judge ruled.

Given that the applicant had achieved partial success, the court ordered that costs should follow the result, with the applicant entitled to recover its legal costs on the higher “scale C” due to the complexity and importance of the matter.