In the Request for Qualifications and Proposals (RFP) issued in relation to the Coal Baseload IPP Procurement Programme, the Department of Energy (DoE) recognises that, at any bid submission date, bidders may not have all of the necessary appointments, consents or documents required to undertake their projects immediately upon being appointed as preferred bidders.
To ensure that bidders who are appointed as preferred bidders are fully committed to developing their projects within the timeframes provided in the project development plan (which is to be submitted as part of the bid response), the RFP introduces the concept of a PB PD Undertaking, which must be delivered to the DoE simultaneously with its preferred bidder guarantee.
This undertaking is a non-negotiable document in the form provided in the RFP. In the PB PD Undertaking, a bidder undertakes to develop its project within the timeframes provided as part of the bid response in order to achieve a commercial and financial close within the requisite time frame.
The preferred bidder must undertake to finalise and deliver to the DoE, at least one month before the scheduled commercial close for a project, any outstanding consents, documents and information to evidence, among other things, the following:
- the incorporation of the project company and the finalisation of the project company’s constitutional documents;
- the final selection of the shareholders and finalisation and execution of the shareholders agreement;
- the settlement of all arrangements in respect of equity;
- the final selection and appointment of contractors and suppliers;
- the finalisation and settlement of the legal arrangements in respect of the ownership or use of the project site, as well as the execution and registration of all documents relating thereto;
- that all outstanding consents necessary for the construction and operation of the facility, including all environmental consents and land use consents have been obtained;
- details and/or plans required in respect of the project consents;
- that a NERSA generation licence and Eskom budget quote have been obtained for the project; and
- compliance by the project with all applicable economic development commitments.
Bidders may lose their preferred bidder status if they fail to sign, submit and comply with any of the provisions in the PB PD Undertaking timeously. Whether or not the PB PD Undertaking fulfils the objective of ensuring on-time project delivery is yet to be seen.