OLD MUTUAL DUE DILIGENCE ON INDEPENDENT POWER PRODUCER SOCIO-ECONOMIC AND ENTERPRISE DEVELOPMENT
The Old Mutual Investment Group has invested in several renewable projects across three provinces. In 2017,Tshikululu was approached to assess the compliance and effectiveness of the socio-economic and enterprise development commitments of four of these Independent Power Producer renewable energy projects.
In 2017, the Old Mutual Investment Group invited a bid to undertake a due diligence exercise on the socio-economic (SED) and enterprise development (ED) commitments for each of these Independent Power Producer (IPP) renewable energy projects, and to review and provide recommendations to continue and extend the investments.
In summary, the Old Mutual Investment Group required: •an in-depth review of each of the components of the ED bid commitments made in respect of the 4/5 Round 4 projects •an assessment of these bid commitments against the request for proposal, market benchmarks and standards and latest development •an analysis of the bid commitments and strategy in respect of how to meet certain commitments •a review of the implications of changing certain components in the bid (specifically local content) to meet the recommendations •a review of the applicable penalty regime and an identification of any potential concerns in respect of the Sponsor Economic Development bid commitments
Old Mutual awarded Tshikululu the tender based on Tshikululu’s track record in advising renewable energy clients in recent years; its deep knowledge of the Renewable Energy Independent Power Producer Procurement Programme, the Department of Energy’s economic development and reporting requirements; its proven approach to conducting community assessments throughout South Africa as well as Tshikululu’s experience in developing community-centred socio-economic development strategies and its extensive track record in working in all areas of South Africa.
Role & Solution:
Tshikululu’s approach to this project was twofold. The first focused on Governance and Compliance. This involved a review of essential documentation to establish the compliance obligations in terms of the original bid, current status of the obligations, and procedural adherence in the event of non-compliance.
Examples of documentation included the IPP agreement; Department of Energy’s quarterly Annexure B reports; original bid documents; the IPP’s Annual Economic Development Plan and Enterprise Development Plan and the Trust deeds.
The second phase was around Project Evaluation. A review and cross-referencing of the IPP’s sustainability Plan, SED/ED Strategy, Community Assessments and Project contracts and payments to beneficiaries helped Tshikululu provide insight into the alignment of the bid document, community needs strategy and how the impact could be measured going forward.
By appointing Tshikululu to undertake a due diligence exercise in the renewable energy projects, the Old Mutual Investment Group benefitted from not only best-in-class social development services, but also from access to some of South Africa’s most-dedicated and knowledgeable social investment experts. As a result of this process, Old Mutual decided to continue and extend their renewable energy investments.
Tshikululu has worked extensively with renewable energy clients in a number of different capacities and has deep familiarity with the REIPPPP process and the Department of Energy’s economic development and reporting requirements.