SBI Offshore affirms confidence in solar project amid allegations from detractors

A key project that SBI Offshore announced earlier this year to diversify into the solar energy business is not viable, and its downsizing has not been properly communicated to investors, says James Lau, a former employee of the company who has been trying to unseat its CEO John Chan.

On April 26, SBI Offshore announced that it would develop a photovoltaic power plant in Hopetown, South Africa. The company said the project would initially supply 50MW of power to the local municipality, and that it would gradually be scaled up over 10 years to 1,000MW to serve the surrounding region. According to individuals familiar with the project, a company called Tau Mining had negotiated a power purchase agreement with the local municipality for a solar plant to be built on former mining land. Tau Mining transferred all its rights and interests in the project to SBI Offshore.

However, there is insufficient demand in Hopetown for the power project, says Lau. Moreover, SBI Offshore has not secured an agreement from South Africa’s national power company, Eskom, to take up the excess supply. In fact, within three months of announcing the Hopetown project, officials at SBI Offshore began talking about installing only 10MW of capacity, though no announcement of the downsizing appears to have been made. Yet, even the current 10MW project would not be viable without a deal with Eskom, he adds.

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