New bid to sink deal for powerships

• Outa goes to court to get a full record of decisions

Lobby group Organisation Undoing Tax Abuse (Outa) says it is taking the energy regulator to court over licences granted to Turkish company Karpowership. It wants to force the regulator to provide a “complete, unredacted record” of its decisions to award generation licences to the company.

Outa’s challenge is the latest of multiple legal battles lodged since March 2021 when Karpowership won the largest share of the government’s emergency power tender, getting approval for the provision of 1,200MW of power to the national grid.

There have been legal challenges based on the environmental effect of the powerships as well as the cost and the 20year duration of the contract.

Environmentalists have pointed to the potential damage to SA’s marine ecology and fishing by burning fossil fuels.

If Outa’s court application is a success, it could delay Karpowership’s plans to plug power into SA’s ailing electricity grid.

As the government scrambles to find solutions that will ease the deepening electricity crisis, minister of mineral resources & energy Gwede Mantashe has again started to advocate for the swift finalisation of the Karpowership deal.

At an ANC energy dialogue in Johannesburg last week and again during the past weekend’s ANC lekgotla, Mantashe said the government aimed to complete Karpowership’s outstanding regulatory requirements by the end of March.

He said his department was in talks with Karpowership to reduce its power purchase agreement for its ship-mounted gas-fired power plants to 10 years, but warned this might add to the cost per unit of power.

The mineral resources & energy department, with the help of the independent power producers’ office, was “attending to the challenges … with the intent to resolve all outstanding issues by no later than end March 2023”, he said in a presentation to the ANC lekgotla.

According to Outa, the projected costs of the Karpowership projects over a 20-year period are reported to be more than R200bn, including fuel supply.

In its application filed on January 23 in the high court in Pretoria, Outa claims that the National Energy Regulator of SA (Nersa) has deliberately withheld documents related to the decision to grant licences to Karpowership, including the reasons for the decision.

“Both Nersa and Karpowership have unequivocally indicated that they will not provide an unredacted record to Outa or even identify the information being withheld. There is also no explanation for how providing the information would prejudice Karpowership,” says Outa legal project manager Brendan Slade.

He said the record provided to Outa is voluminous, with neither an index nor a list of the sections which were redacted.

“However, the financial information from the Karpowership application is missing from the documents provided.”

In January, Karpowership filed a fresh application for environmental approval for its powerships with the department of forestry, fisheries & the environment. This was after an earlier appeal was rejected following a legal challenge from environmental activists.

Before its latest application the company undertook a new round of public consultations and a decision is expected by March 7, as reported by Bloomberg.

Liziwe McDaid, the strategic lead for sustainable development, social and environmental justice organisation Green Connection, said if the time period

for the contract is shortened, as envisioned by Mantashe’s department, “then we would need to restart various approval processes like the EIA [environmental impact assessment] and the generation licence as the numbers and impacts would now look different.

“Karpowership has refused to provide critical information on its current financial case, but what we do know is that a 20-year contact was needed to make the price palatable.

“Shortening the time period means Karpowership would want its costs to be recovered in a shorter time, which will mean more expensive electricity.”

Hilton Trollip, an energy research consultant and fellow at the University of Cape Town, said: “It’s unclear whether the [Karpowership] tender process can be amended at this stage. “Maybe that’s why the state of disaster is being thought of to facilitate such tender deals.

“The Karpower deal also locked government into a tariff which was connected to the gas price ... [and] also locked SA into the powerships not only for when they were needed but also for, depending on how you calculate it, probably for each 12 hours a day we would have to use that power even if there was much cheaper power.”

Nersa and Karpowership had not responded to queries by the time of publication.

OUTA CLAIMS NERSA HAS DELIBERATELY WITHHELD DOCUMENTS