Research On The Legal Risks Of The "Renewable Energy Independent Power Producer Procurement Project" In South Afric

Just as energy poverty will highlight and aggravate social poverty,greatly reducing energy poverty is also beneficial to alleviate social poverty.South Africa is trying to alleviate the pressure of energy poverty with energy policies such as Renewable Energy Independent Power Producers Procurement Programme(REIPPPP),which aims to reduce the country’s dependence on fossil fuels,stimulate the local renewable energy industry and promote the sustainable growth of social economy and environment.Nowadays,the development dividend of REIPPPP project in South Africa has attracted the attention of many investors,but the red tape behind it,such as black economic power rules and community economic development obligations,really makes investors hesitate.Without sufficient knowledge and understanding of the rule of South Africa’s“Renewable Energy Independent Power Producers Procurement Programme”,Chinese investors will encounter more legal difficulties in the process of investment investigation and operation in South Africa.Therefore,the research goal of this article is to discuss the main legal risks(community economic development obligations,EPC contracts,financing agreements)and risk prevention of South African renewable energy projects for Chinese investors,so that they can penetrate into the investment behavior and predict the legal consequences that may be encountered,thus avoiding legal risks.This paper is divided into four chapters:The first part of this article takes the general situation of procurement projects of“Renewable Energy Independent Power Producers Procurement Programme” as the breakthrough point,and expounds its legal basis,implementation status and project types in detail.“REIPPPP” uses a rolling bidding window as its operation mechanism.The bidder with the highest score in the two stages of prequalification and bidding scoring will be selected as the winning bidder.The winning bidder needs to draw up a project agreement,set up a project company,negotiate and sign a contract with the project contractor/operator/lender and other subjects.The second part is intended to explain the scope of this article.Based on the results of the above-mentioned legal risk identification of the whole process of REIPPPP project,under the premise of following the principles of feasibility,importance,and pertinence,"community economic development obligations","EPC contracts" and "financing agreements" are selected as the main legal risks of this article.The third part of the article takes the above three legal risks as the foothold,and analyzes the legal risks one by one.(1)The indicators related to economic development obligations in the bidding scoring stage are one of the reasons why REIPPPP project is praised,of which "community economic development obligations" are the unique requirements of the project.Practice has proved that this "unique one" has brought great challenges to non-skilled project companies to continuously interact with the community;(2)EPC contract is the main form of construction contract under REIPPPP,but EPC contract limits the ability of the project company to intervene or influence the project,and the unclear provisions of EPC contract and poor management can easily lead to frequent disputes in international construction projects;(3)In REIPPPP projects,the financing agreement may be a financing loan agreement or an equity agreement.Project companies have greater flexibility and initiative in financing arrangements,but Chinese enterprises are often not good at constructing financing schemes based on factors such as financiability and reduction of financing costs,and the financing arrangements for REIPPPP projects need to take into account the special requirements of black economy/community shareholding ratio and lender risk preference.The fourth part of the article puts forward feasible suggestions for the preventive measures of the aforementioned main legal risks item by item from the legal point of view,in order to provide some reference for Chinese enterprises investing in REIPPPP projects in South Africa:(1)Community Economic Development Obligations: The project company can deal with the uncertainty in the policy implementation process by continuously communicating with various stakeholders,building an industry interaction platform,and starting to study different financing mechanisms,so as to eliminate the negative impact of disorderly competition among project companies in the same region and resolve conflicts in the implementation process of community programs;(2)EPC contract: The project company needs to be alert to the legal risks of erosion of key rights and interests,such as clarifying the intervention right and control right of the contractor in case of fundamental breach of contract,and weighing whether to avoid high consideration by offsetting part of the risk premium for the contractor.In addition,the project company should,on the basis of respecting the principle of fair risk distribution,know the risk points of drafting the contract terms and actively strive for its own rights and interests;(3)Financing: The project company shall employ professionals to discuss the details of the contract,and carefully consider the proportion of black economic/community shares in equity financing,as well as the countermeasures for possible non-compliance of equity structure in the later period.It should be noted that Basel III reflects the global trend of banking supervision,project companies should also pay attention to the updating and iteration of financing paths and reduce the cost of loan financing by constructing mixed financing schemes.