Ousting of renewable energy head shrouded in mystery

South Africa’s crucial move towards renewable energy procurement could be on shaky ground with the ousting of a key figure who championed the diversification of the country’s energy mix to alleviate pressure on bankrupt Eskom.

Karen Breytenbach was removed as the head of the Independent Power Producers (IPP) Office on Monday 22 July.

Breytenbach told Bloomberg she was asked to vacate her job by the Department of Energy and the Development Bank of Southern Africa (DBSA) about nine months before her contract expires. She said no reasons were given for her ousting, and she was told an acting head of the IPP Office would be appointed until her permanent successor was identified.

Business Maverick attempted to contact Breytenbach for comment, but she was not available.

Breytenbach is widely respected for leading the renewable energy programme since 2011 that has successfully attracted billions of rand of investments in solar and wind power. The programme has raised more than R200-billion over the past five years, with the successful roll-out of more than 100 renewable energy projects.

She also had to navigate political controversies surrounding the renewable energy programme, with trade unions and the EFF claiming the programme’s competitive costs were to blame for the dire financial position of Eskom, which cannot pay its more than R400-billion debt.

“She is a top-shelf professional when it comes to South Africa’s renewable energy industry,” said one energy expert about Breytenbach, a former National Treasury official who has built a more than two-decade career in the public-private partnership and renewable energy industry.

The IPP Office was established in November 2010 by the Department of Mineral Resources and Energy, National Treasury and DBSA to ensure a competitive, fair and transparent procurement process for renewable energy in South Africa.

DBSA is a state-owned development finance institution that invests in infrastructure projects, with a loan and disbursement book of R12.2-billion in 2018. In 2016, the Department of Energy, National Treasury, and DBSA entered into a memorandum of agreement in which the latter’s role in the IPP Office was outlined.

The DBSA provided the initial seed funding to establish the IPP office, giving it the prerogative to appoint staff at the IPP office. Breytenbach was seconded to the office by National Treasury.

DBSA also enjoyed the power to appoint transaction advisory firms to assist the IPP Office in the evaluation of tender bids for independent power producers. Essentially, the DBSA headed a comprehensive procurement platform, which also included funding from commercial banks, some which have ditched the funding of coal-fired power stations in favour of renewable energy projects.

Why Breytenbach left

The Department of Energy and DBSA have issued mixed messages regarding the departure of Breytenbach.

The DBSA said Breytenbach has not been an employee of DBSA (and effectively the IPP Office) since the expiry of her three-year employment contract on 28 February 2019. This was when she reached the development finance institution’s “mandatory retirement age of 60”.

The DBSA, National Treasury, and department agreed to offer Breytenbach an extended contract only for a short-term period from 15 March 2019 to 31 July 2019. “This was done in order to complete the recruitment process of the new head IPP office.”

Breytenbach did not accept the short-term contract offer. DBSA made another offer to Breytenbach on 7 May 2019 to extend her employment contract on a short-term basis. She declined this offer on 13 May 2019.

Beyond reaching the DBSA’s “mandatory retirement age” it is unclear why Breytenbach’s contract was not extended for a longer period.

Although the Department of Energy acknowledged Business Maverick’s request for comment about circumstances leading to Breytenbach’s exit from the IPP office, it had not responded at the time of publishing.

Instead, it released a cryptic media statement on Tuesday 23 July. The department said it had requested a meeting with the DBSA and National Treasury as the chair of a Joint Implementation Committee (JIC) to address undisclosed issues that were “creating operational instability” at the IPP Office. The JIC is mandated to oversee governance issues at the IPP office under the 2016 memorandum of agreement between the Department of Energy, National Treasury, and DBSA.

“The JIC unanimously agreed that the current situation was untenable and agreed on the need for urgent action to be taken to create stability at the IPP Office.”

The department said since the expiry of Breytenbach’s contract, it has “become clear” that “it is not possible to resolve” the appointment of the head of the IPP Office “under the current circumstances”.

Those circumstances are unknown. BM