1.     INTRODUCTION

1.1.         The first key date for potential bidders is 14 October 2013, being the date of the First Stage 1 Process (details of which are below).

1.2.         On 21 August 2013, the Department of Energy (the "DoE") issued The Request for Qualification and Proposals for New Generation Capacity under the Small Projects IPP Procurement Programme (the "RFP") under Tender No. 004/13/14, in terms of which the DoE will initially procure 100MW in respect of the following technologies (the "Small Projects IPP Procurement Programme"):

1.2.1.      onshore wind;

1.2.2.      solar photovoltaic;

1.2.3.      biomass; and

1.2.4.      landfill gas.

1.3.         The Small Projects IPP Procurement Programme is the second programme to be initiated by the DoE, following the Request for Qualification and Proposals for New Generation Capacity under the IPP Procurement Programme issued in August 2013 under Tender No. DOE/003/13/14 (the "IPP Procurement Programme").

1.4.         The key distinguishing factor between the Small Projects IPP Procurement Programme and the IPP Procurement Programme is that the Small Projects IPP Procurement Programme is designed to procure generation capacity from smaller renewable energy facilities in the range of 1MW to 5MW. Additionally, the Small Projects IPP Procurement Programme does not cater for projects utilising concentrated solar power or small hydro technologies.

1.5.         The memorandum sets out some of the key features of the Small Projects IPP Procurement Programme.

2.     BIDDING PROCESS

2.1.         Unlike the IPP Procurement Programme, the process leading up to the appointment of a bidder as a preferred bidder is a two stage process.

2.2.         In the first stage, bidders are required to comply with the "Stage 1 Qualification Criteria", by supplying basic information about the bidder and its project. There are no financial requirements in the Stage 1 Qualification Criteria.

2.3.         If the DoE is satisfied that the Stage 1 Qualification Criteria have been met, the bidders will be appointed as "Selected Bidders" and will thereafter be required to comply with the "Stage 2 Qualification Criteria", which relates to detailed legal, environmental, land, financial, technical, economic development information and is similar to the information required under the IPP Procurement Programme.

2.4.         Those "Stage 2 Bid Submissions" which progress to the next stage will be evaluated, on a comparative basis per technology, against the "Stage 2 Evaluation Criteria", which relate to price and economic development.

2.5.         Bidders are required to bid two prices, being a fully indexed price and a partially indexed price. The fully indexed price forms part of the Stage 2 Qualification Criteria, and should not exceed the following caps:

2.5.1.      onshore wind – R1 000/MWh

2.5.2.      solar photovoltaic – R1 400/MWh

2.5.3.      biomass – R1 400/MWh

2.5.4.      biogas – R900/MWh

2.5.5.      landfill gas – R940/MWh.

2.6.         The indicative timeline, in respect of the first two processes, proposed by the DoE is as follows:

2.6.1.      First Stage 1 Process – 14 October 2013

2.6.2.      First Stage 2 Process – 14 April 2014

2.6.3.      Second Stage 1 Process – 10 February 2013

2.6.4.      Second Stage 2 Process – 2 March 2015.

2.7.         A bidder submitting a response under the First Stage 1 Process may elect which Stage 2 process it wishes to participate in, and this should encourage bidders as far as possible to participate in the First Stage 1 Process, regardless of the state of readiness of their projects, but provided they are able to comply with the Stage 1 Qualification Criteria.

2.8.         It is also envisaged that there will be two further processes in addition to the processes referred to above.  

3.     SUITE OF DOCUMENTS TO BE ENTERED INTO BY BIDDERS

3.1.         A preferred bidder which reaches financial close will be required to enter into an implementation agreement with the DoE, a power purchase agreement with a buyer, and an Eskom distribution agreement with Eskom or a Municipal distribution agreement with a municipality (whichever is applicable). In addition, such preferred bidder may also enter into a self-build agreement where the preferred bidder will construct the connection to the system itself.

3.1.         Additionally, a preferred bidder will enter into financing agreements and direct agreements with lenders (where its project is financed by third party lenders), an EPC agreement with engineering, procurement and construction contractors, an O&M agreement with operations and maintenance contractors and a shareholders agreement between the equity sponsors of the applicable project.

3.1.         The bidder will also need to obtain a generation licence from NERSA.