The Department of Energy (DoE)’s Renewable Energy Independent Power Producer Programme (REIPPP), which outlines the criteria for Independent Power Producers to gain operating licenses, places great emphasis on local content in a bid to ensure that the economic benefits from renewable energy are enjoyed by the communities where energy is generated.
Historically, most negotiations between host communities and investors have been skewed to the benefit of the consortiums or multinationals which use their economic leverage to achieve their objectives, which may not match, or even be in opposition to those of the community.
Israel Noko, CEO of NPI Governance Consulting asserts that, “In the long term, negotiations which don’t factor in local community needs will backfire, as illustrated by clashes within South Africa’s local mining industry and as far afield as the run-ins in the oil producing Niger Delta of Nigeria.”
Most communities negotiate through their traditional leaders who preside over the land and other community resources. Engaging with traditional leaders is an important step in ensuring that there is broad stakeholder buy-in, that appropriate solutions and that economic develop plans are in step with local priorities.
Noko explains that, “Community profiling has become such a critical component in understanding local community needs that there’s simply no way these investigations can be successfully conducted via desktop research.”
Effective engagement begins with consortiums being on the ground to engage in meaningful dialogue, qualitative assessments of local conditions in order to create informed context. This will inform the choices made around investment and economic development projects.
Negotiation between investors and local communities requires skill and experience. Therefore the benefits of communities engaging consultants/experts to represent them are that they have a deep understanding of the codes and other legal frameworks, access to international precedents and their impartiality gives them the ability to drive hard negotiations and avoid emotional traps.
The negotiation of essentials such as jobs, scholarships and schools, alongside priorities such long term infrastructure projects to deliver economic enablers such as roads, electricity and technology infrastructure, require nimble negotiation.
“Many multinationals make the mistake of assuming that all communities in South Africa have the same needs and the net effect of that assumption has been a disaster because inevitably, the local communities do not buy into their vision” clarifies Noko.
The DoE’s demands for local content and job creation as criteria to awarding of operating licences are game changers. By introducing punitive measures in the form of fines or revocation of licenses, local communities have the means to ensure that the priorities of local content and job creation remain on top of the agenda.
However, the grounds on which licenses can be revoked or fines imposed, must be clear to all parties from the onset. “In most circumstances, community interests are protected by a Board of Trustees, which necessitates that the members of the Board have in-depth knowledge and understanding of the deal as well as a solid grasp of the social, political and economic elements which impact on it.” Noko emphasises.
Renewable energy represents great opportunity for corporate players and local communities alike, however the initial engagements require strategic insight, long term view and a win-win mentality in order to be sustainable and effectively address the sustainable energy challenges South Africa faces.
“A good portion of President Zuma’s 2013 State of the Nation Address stressed the need for economic growth and stressed on the need to more collaboration between private sector interests and community needs which in turn will impact on job creation. In future, the absence of sustainable local community participation could precipitate the recurrence of incidents similar to those of Marikana and Diepsloot.”