RENEWABLE ENERGY AND EMPOWERMENT
RENEWABLE ENERGY AND EMPOWERMENT
By Stella Nolan
Africa, it is rare to come across
a solution that ticks all the boxes, in
terms of providing a cost-effective mechanism
that positively impacts an organisation’s bottom
line, which empowers small business and meaningfully
contributes to an organisation’s B-BBEE Scorecard. Initially,
when developing such solutions, they are based on addressing
fundamental challenges facing organisations in delivering or
producing their product or service cost-effectively. Then, upon
being aligned with the principles of Transformation, they organically
evolve to inviting more people into the economy. This was the basis
upon which Fibon Energy was founded.
Avesh Padayachee, an Attorney, is the Founder and CEO of
Fibon Energy. The organisation was established on a viable
renewable energy solution that subsequently evolved into
a meaningful contributor to a Transforming South Africa.
Avesh gave TFM Magazine insight into their unique
solution and the potential it has to compliment an
organisation’s B-BBEE score.
What was the challenge that initially
spearheaded your renewable energy
It was the era of load-shedding that had a dire impact on South
African businesses over the past decade. As we all know, electricity
supply and the cost thereof have been the subject of much robust
debate. Although in December 2017 The National Energy Regulator
declined Eskom’s request for a 19.9% tariff increase and allowed
for a more palatable tariff increase of 5.23%, it by no means solves
our energy challenges. Even though much has changed since the
era of load-shedding began in 2008, South Africa’s power systems
remain constrained. Substantial tariff increases in the immediate
future may still be necessary to keep Eskom afloat. Irrelevant of
how the tariff increases play out, it is essential that there is a secure
supply of electricity, at a cost which South Africa can afford. This is
critical to attracting investment to boost the economy and achieve
Government’s objectives laid out in the National Development Plan.
What solution does Fibon Energy provide?
Fibon Energy offers South African business an alternate renewable energy solution to protect their business in the long-term which subsequently supports an organisation’s Transformation Agenda. Fibon develops, builds, owns and maintains rooftop solar assets for the commercial and industrial sectors in South Africa. The solar asset class is an income generating renewable and green energy asset that has various solar power systems that are mounted on roof tops. Fibon Energy is an advisory practice providing turnkey engineering, financial, legal and environmental services to renewable energy projects and/or green energy developments. This includes in-house energy management services that provide green building certification, energy management and engineering services. Fibon has developed a B-BBEE and Green Energy structured product specifically engineered for South African organisations that: > provides renewable energy solutions, and > improves an organisation’s B-BBEE scorecard by optimising the benefits of their financial contribution.
How does Fibon’s solution support B-BBEE?
Fibon Energy is a wholly ‘Black’-owned and controlled organisation with a diverse multi-disciplinary team. We have a B-BBEE level 1 status with 135% procurement recognition. The organisation hosts a panel of energy experts and has intimate knowledge of rolling out empowerment transactions.
We believe that access to energy at an affordable cost is a significant driver for economic growth in South Africa. When we engaged with organisations from a green energy perspective, we discovered that many organisations experience challenges that support their Supplier Development programs. More often than not, Supplier Development contributions are pooled and disbursed to unknown beneficiaries, resulting in either none or limited interaction between an organisation and their beneficiaries. This consequently results in beneficiaries not becoming a meaningful part of an organisation’s ecosystem. The overall roll-out of the Fibon B-BBEE energy solution centres around Enterprise Development, Supplier Development, Preferential Procurement and Skills Development.
What is the blueprint of the Fibon Energy solution?
There are several structures that have been developed for the product premised on both monetary and non-monetary contributions. These include investments, guarantees, loans, credit facilities, professional and consulting services, licensing and registration fees, training and mentoring, as well as discounts and settlement of accounts. An organisation provides a once-off contribution to Fibon Energy that is recognised as Enterprise Development, Supplier Development, Preferential Procurement and/or Skills Development spend year on year over a five year period. During this period, Fibon Energy owns, installs, operates and maintains the solar asset. Thus, the contribution is recognised over the five years. Fibon Energy creates at least full-time job year on year in South Africa in terms of the solution. We train and develop teams to actively participate in the operations and maintain the asset. The objective is for these teams to evolve to become fully fledged businesses in their own right over the five-year period.
What are the overall benefits of the Fibon Energy solution?
Amongst others, there are three core benefits. Firstly, reduction of operational costs in terms of electricity from inception. Secondly, the once-off contribution provides multiple values contributing to the B-BBEE recognition for an organisation. Lastly, the renewable and sustainable energy lasts up to 25 years. To demonstrate how the B-BBEE and Green Energy Structured Product may work for a South African business, an organisation, for example advances a R10m contribution to Fibon Energy which may afford the organisation, in aggregate, over five years
1 Enterprise Development and/or Supplier Development spend recognition - R35m;
2 Preferential Procurement spend - R12.5m;
3 Bonus Points - 7 points in total; and
4 Energy savings that have a direct saving on operational costs with an estimated monthly saving of 15% on the
overall cost of electricity.
The R10m contribution provides, in aggregate, a R45m B-BBEE contribution amount. Note; the results are specific
to each organisation and are subject to an individual assessment of the organisation’s B-BBEE scorecard by Fibon
Has the Fibon solution been vetted as viable? An opinion on the Fibon solution was prepared on behalf of a publicly listed South African organisation which undertook the Fibon Energy solution as part of their Transformation strategy. The holistic Fibon solution was vetted then approved as a viable contribution to the listed organisation’s scorecard in line with legislation. In October 2017, Eric Ackroyd, in his capacity as Verification Director of EmpowerLogic, prepared an opinion on the Fibon solution based on this specific transaction. It was concluded that the solution is compliant with B-BBEE Regulations and aligns with the B-BBEE Amendment Act as it stands today. How does the Fibon solution impact Preferential Procurement? The Fibon solution is premised on Supplier Development and Enterprise Development which affords a multiple value recognition towards an organisation’s B-BBEE Preferential Procurement scorecard.