Parliamentary committee to probe Karpowership contract

Parliament’s mineral resources & energy committee plans to conduct an inquiry into the awarding of a contract for emergency power from Turkish company Karpowership.

The inquiry will look into the risk-mitigation independent power producer procurement programme (RMIPPPP), and in particular allegations of corruption surrounding the awarding of a contract to Karpowership, which is already the subject of litigation in the Pretoria high court.

The advice obtained by the committee from parliament’s legal advisers is that the matter being heard in court does not preclude the committee from investigating it.

The inquiry was prompted by a letter to the former speaker of the National Assembly, Thandi Modise, now the minister of defence, from a group of civil society organisations concerned about the department of mineral resources & energy’s choice of Karpowership as a preferred bidder.

In March, Karpowership was named as one of the preferred bidders to supply the bulk of the 2,000MW in capacity the government is procuring to reduce load-shedding. Through the use of floating power plants, it proposes to use liquefied natural gas to produce 1,220MW of power for Eskom under the RMIPPPP.

The group of civil society organisations said the choice of Karpowership would be expensive; would have significant effects on human rights, the climate and the environment; provided little opportunity for local content; and undermined the just energy transition. They told Modise the choice of Karpowership for emergency power would tie SA into the use of fossil fuels for at least 20 years and asked parliament to establish an ad hoc committee to investigate.

Modise said there was an established practice in parliament that if a committee already exists to consider a matter then the establishment of an ad hoc committee should be discouraged to save resources. She referred the letter to the committee, which has decided to go ahead with an inquiry — to be held in person, not virtually. The committee met on Tuesday to agree on the terms of reference.

Committee chair Sahlulele Luzipo said the committee could not shy away from allegations of attempts to corrupt the tender award process.

The terms of reference agreed on include that the committee will look at the ability of the department to discharge the RMIPPP programme and to fulfil its fiduciary duties in this regard.

This would include looking into the affordability and sustainability of the RMIPPPP projects and the failure to comply with procurement prescripts, as well as governance-related issues such as the process leading up to the awarding of the successful bids; the conduct of senior managers of the department in meeting the bidders before an award was made; the circumstances leading to the changing of the initial closing date for bids; and the environmental and competition authorisations and exemptions that were issued to some bidders.

Still to be decided is whether an experienced evidence leader will be appointed to lead the inquiry.

DNG Energy, one of the losing bidders in the government’s procurement of emergency power, has argued in the Pretoria high court that Karpowership SA was the sole beneficiary of changes made to the tender bid shortly before the deadline. It claims the bid was rigged and the deadline for interested parties to submit their bids was extended twice to favour Karpowership, resulting in the company winning the lion’s share of the energy contracts.

DNG alleged that the selection of Karpowership was mired in corruption and has asked the court to overturn the contract and to order the department to award the contract to it instead. DNG proposed it would produce 1,300MW of power for Eskom through three of its liquefied gas facilities.

DNG Energy CEO Aldworth Mbalati has alleged that a department official attempted to bribe him in return for help in getting the contract.

The department has responded that DNG’s bid was rejected because it did not meet the legal and financial requirements, among other issues. It and Karpowership have denied the allegations of corruption and undue influence.

LUZIPO SAID THE COMMITTEE COULD NOT SHY AWAY FROM ALLEGATIONS OF ATTEMPTS TO CORRUPT THE PROCESS