Rajen Ranchhoojee, Special Legal Counsel in Orrick’s Washington, D.C. office, recently spoke with inspiratia [subscription required] regarding news that the South African government may attempt to renegotiate tariffs for the 27 projects involved in rounds 3.5 and 4 of its much-delayed Renewable Energy Independent Power Producer Procurement (REIPPP) program.

Despite having placed successful bids in 2015, these projects never signed power purchase agreements (PPAs). After months of uncertainty, the country’s energy minister announced that the PPAs would finally be signed – but the tariffs would also have to be renegotiated. This would be unlawful according to the rules of the REIPPP program.

According to Rajen, "There is not only the risk but the reality that there would be major claims against the government if they had to try and renege on the tariffs they'd agreed up front.”

"The process that the IPP Office has proposed has brought a lot of confidence to the market,” he continued, adding, "The fact that it's not run on a strictly formulaic basis is welcome – only because the government, even though we've had this great formula, has not stuck to the timelines for the last three years."

Rajen concluded, "The IPPs are seeing this as power being put back in their hands."