The applicant was appointed a preferred bidder under the Department of Mineral Resources and Energy’s Request for Proposals (RFP) for renewable energy procurement. The applicant was appointed for six onshore wind projects and six solar projects. A requirement of the RFP, for confirmation of preferred bidder status, was to procure bank guarantees for each project. The applicant furnished 12 guarantees, totalling around R255 million. Guarantees for the six wind projects were guaranteed in the amount of R165 million and for the solar projects, R90 million.

The guarantees remained in place until either the expiration of the Bid Validity Period (referred to in the RFP) or until Financial Close had been reached, and performance had occurred. The guarantees could be called if, for amongst other reasons, preferred bidder status was revoked for any reason.

The applicant failed to meet the conditions for the parties to reach commercial close. The guarantees were called by the Department, and the applicant applied to court to interdict the bank from paying the guarantees, alleging that the guarantees had expired.

The question to be determined was whether the guarantees could be validly called on at that time, and when the bid validity period expired.

Implementation agreements for the solar projects were concluded in December 2022. These implementation agreements introduced additional terms which governed the contractual relationship between the parties to the project beyond the RFP. Commercial close was extended to June 2023. Under the implementation agreement, if the conditions were not met by commercial close, neither party had any claim against the other. The bid validity period expired on 30 June 2023, and the guarantees lapsed on that date. The guarantees were called in 2024 by the Department after expiry. The court therefore interdicted the bank from paying the guarantees relating to the solar projects.

No implementation agreements were ever concluded regarding the wind projects, so they were governed only by the RFP. The guarantees, according to the RFP, were to be valid until the bid validity period expired or when the implementation agreement was complied with. Since no implementation agreements were signed, nothing triggered expiry of the guarantees. The guarantees for the onshore wind projects were still valid when called on in 2024. The interdict was refused for the wind projects.

Globeleq-Mainstream South Africa Renewable Power (Pty) Ltd v ABSA Bank Limited and Others