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AMABHUNGANE

Karpowership consortium: In affidavit, losing bidder claims ‘blatant corruption’, fingers Mantashe ‘associate’

Minister of Mineral Resources and Energy Gwede Mantashe. (Photo: Gallo Images / The Times / Lauren Mulligan)
By amaBhungane
29 Apr 2021 46

A jilted firm is asking the high court to overturn the government’s appointment of preferred bidders for the supply of emergency power, claiming the tender process was ‘grossly and blatantly flawed, corrupt and procedurally unfair’. The lion’s share went to the Karpowership consortium, which has denied involvement in any impropriety.


The multibillion-rand tender for the supply of emergency power was rigged by top bureaucrats and associates of Mineral Resources and Energy Minister Gwede Mantashe, a losing bidder has claimed in court papers. 

How does he know? They allegedly offered him a majority share of the 2,000-megawatt programme first before most of it was awarded to the controversial Turkish-led Karpowership SA instead. 

The explosive allegation was made in an affidavit deposed to by Aldworth Mbalati, the founder and chief executive of DNG Power Holdings, a company that had hoped to win a substantial part of the emergency procurement, officially known as the Risk Mitigation Independent Power Producer Procurement Programme (RMIPPPP).

DNG filed urgent papers in the Pretoria High Court this week to challenge the bid outcome. The company’s allegations are untested and are expected to be fiercely contested.

This article has been updated to reflect the responses of Mantashe, his wife and Karpowership SA to questions sent to them after publication.

Mantashe would not be drawn into specifics, saying “let me deal with these things in court”. He told amaBhungane that newspapers attempt to link him to “all sorts of associates” and that people are attempting to discredit him.

Karpowership SA said in a statement:  “We strongly reject the allegation of impropriety on the part of Karpowership SA … We have every confidence that the South African courts will deal with this appropriately… The false allegations levied by a failed bidder are alarming. It is right to have robust debate around the best options for South Africa’s energy future, but these debates should be fact-based.”

In his affidavit, Mbalati recounts being courted by “a businessman with close ties to [Mantashe]” last July, a month before the Department of Mineral Resources and Energy (DMRE) published the bid. The businessman, whom he does not name, allegedly told Mbalati that the tender would soon be released – and that the outcome would be predetermined.

The businessman, Mbalati states, insisted that DNG “should be assisted by certain undisclosed parties should it wish to be a preferred bidder and ultimately be awarded the tender” and that he, the businessman, would be able to “facilitate the relationship with the undisclosed parties”.

Mbalati states that he refused to be associated with any collusion or unlawful conduct.

Soon, Mbalati states, he began to see what he regarded as evidence that the tender was being manipulated. 

On about 26 October 2020 he got information that a representative from Karpowership SA had approached “a close family member” of Mantashe for an extension of bid deadlines.

As evidence of this claim, Mbalati attaches to his affidavit a forwarded SMS which reads: “We’ve got some intel from the main principal’ wife that our requested extension has been under consideration & they my (sic) may afford bidders a 3week delay in submission & it should be announced imminently.”

Although Mbalati is not explicit, the “main principal’ wife” is evidently a reference to Mantashe’s wife, Nolwandle.

Four days later – and just minutes before the 30 October 2020 deadline, according to Mbalati – bidders were informed that the deadline would be extended by a month.

He denied meddling in the bid or having anything to do with the extension.

“I am asked to procure 2000 megawatts… my responsibility is to push relevant entities in the department to drive that program because we need that energy, and I don’t behave like a school principal and look over their shoulders.” 

“The deadline is not extended by the minister, it is extended by the bid committee which is in the [IPP Office], not the department… the IPP operates independently.”

Nolwandle Mantashe responding to a request for comment after publication, denied any knowledge of or involvement in the deadline extension.  She said she did not “have a clue of the extension you talking about” and had not been approached by anyone about it. (See her detailed response below.)

Mbalati alleges that two days later,  after bidders were informed of the extension on 2 November, the unnamed businessman asked him to attend a cloak-and-dagger meeting, which turned out to be with a “familial relation” of Mantashe as well as a “senior official” of the DMRE and one of the official’s direct subordinates.

At this meeting, in an upmarket Pretoria restaurant called Kream, Mbalati was allegedly offered help to win the bid. He refused the offer which he claims led to a backlash that would ultimately see his company’s bid disqualified.

“I was escorted to a specific table. However, while being escorted to my table, it appeared to me that the restaurant had allowed only a limited number of guests onto its premises that afternoon. In fact, the restaurant turned out to be occupied by a single party only and appeared to have been temporarily closed to the public at large.

“At this meeting… I was asked by the Senior DMRE Official how they (being the attendees), could help in respect of the tender… I emphatically responded that [DNG] required no assistance in compiling its Bid Submissions and that the best way the attendees could help, was not to interfere with the tender process. My remarks were met with anger and vitriol by the attendees.”

Mbalati alleges the DMRE subordinate then told him, “One thing you must understand is that there is a system in this country and if you don’t work in accordance with that system you will fail, even if your project is the best, and I suspect that your project will be the best but that means that you must be part of the system.”

Mbalati says this was unacceptable and he left the meeting. 

Mbalati did not identify the alleged conspirators in his affidavit because, he claims, he is pressing criminal charges against the people involved.

“I have been advised not to disclose the identities of the various individuals at this point in time. However, should this Honourable Court deem it necessary, I am willing to take the Court into my confidence in relation to the identities of the various individuals.” Mbalati provides no evidence that Mantashe was aware of the alleged conspiracy.

Asked about the meeting at Kream, Mantashe told amaBhungane: “There is no claim that I was in Kream… I can’t account for those managers and others that I’m working with, if they go and meet people at Kream it’s up to them, they take the risk, and it’s catching up with them now.”

Mantashe said of his alleged business associate, “I know who they are talking about”, but would not say who.

In the end DNG’s bid for 1,300MW out of the 2,000MW on offer was disqualified and 1,220MW of the 2,000MW went to Karpowership SA, which intends to moor floating power stations in three South African ports for 20 years.

DNG wants the high court to reverse DNG’s disqualification and set aside the appointment of preferred bidders. Pending a full hearing, it wants the court urgently to interdict the government from contracting with the preferred bidders.

“The [DMRE’s] ultimate decision to disqualify [DNG] was arbitrary and/or capricious and was meant as a draconian punishment for [DNG’s] refusal to engage in corrupt practices,” says Mbalati in his affidavit.

“The various parties who requested me to engage in corrupt practices… did so without any shade of shame – only malicious intent to find a new avenue to plunder state resources of an already ailing economy.”

‘Undue interference’

In his affidavit, Mbalati alleges the DMRE made repeated “material and substantial” changes to the rules governing the RMIPPPP in ways that specifically favoured Karpowership SA to the detriment of competitors.

Karpowership SA was DNG’s main rival, as both offered substantial gas turbine solutions in three locations, although Karpowership’s turbines would be on ships and DNG’s on land.

The request for proposal (RFP) for the RMIPPPP was released on 24 August last year and DNG started preparing a bid alongside other hopeful contenders. The deadline for submitting a bid notification – a detailed outline of the proposed bid – was 30 October.

This tight deadline was “extremely onerous and would, as a result thereof, preclude various energy suppliers from being able to participate in the tender processes”, says Mbalati.

Many potential bidders would have fallen by the wayside because they could not practically make the 30 October deadline and knew it well in advance. 

Inside knowledge of a potential extension would have been invaluable, making Mbalati’s claim about Karpowership SA’s alleged intervention with Mantashe’s wife highly significant.

If this claim is true it provides an explanation for the DMRE’s decision to give bidders a month’s extension – but to announce it at literally the last minute: around 5pm on the day of the deadline.

Mbalati states: “Moments before the Bid Notification Submission deadline, and after [DNG] had submitted material confidential information regarding its bid, [DNG] together with the other bid contenders received a briefing note… notifying them that the entire Tender timeline… had been extended by approximately a month.”

The DMRE periodically distributed “briefing notes” to bidders to answer queries and announce modifications to the rules.

Briefing notes distributed by the DMRE show that there was a request on 13 October for the deadline to be moved. The identity of the bidder making the request was confidential, but it asked for an additional six weeks. Another confidential query arrived on 28 October, this time asking for “at least 2-3 months”. 

Despite this, the DMRE appears to have given no indication that it would grant an extension until the last minute, meaning some bidders, like DNG, would have already submitted their bid notifications.

Mbalati speculates foul play specifically targeting DNG.

“Given the blatant corruption that [DNG] refused to be enjoined in… the risk became real that aspects of [DNG’s] Bid Notification Submission could be (and in all likelihood was) disclosed to competitors in order to assist them.”

DNG claims this sudden concession, as well as others that allegedly stacked the odds in favour of Karpowership SA, were the result of “undue interference by third parties”.

For instance, on 19 October the DMRE had also made a major concession by dropping a requirement that bidders needed various licences in place by the end of that month. Now all a bidder needed to show is that they had applied.

As with the original deadline, this requirement would have removed many competitors from the field.

“I submit that this relaxation came as a result of the fact that the predetermined tender awardees were unable to secure the necessary licenses [sic], permits and/or authorisations within the time period,” says Mbalati.

“The briefing notes… were unlawfully utilised in order to make fundamental and critical amendments to the RFP in a predetermined effort to ensure that some if not all the Preferred Bidders could (on the face of it), meet the strict requirements of the RFP, in order to give life to the predetermined decision to appoint the Preferred Bidders as the winners of the Tender.”

Among the amendments, Mbalati claims undermined competition was the late introduction of generous exemptions from local content requirements.

He says that well into the bid process the DMRE’s independent power producer office notified bidders that bidders could be exempted from the mandatory local content percentage of 40%.

Mbalati says: “In essence, this meant that all bidders were (prior to the amendments) mandated to procure 40% of their total resources and equipment from local South African suppliers.

“This stringent requirement precluded various additional companies and organisations from participating in the RFP as they from the outset knew that they would not have been able to meet the stringent and onerous 40% local content requirement within the allocated 2 months in which the final bids had to be submitted.”

He says the losers were those companies, like his own, which could comply with the 40% local content requirement “and the South African economy as a whole”.

Mbalati points out that DNG proposed building three land-based gas-fed power plants that exceeded the original local content requirement, whereas Karpowership SA’s leased powerships were constructed wholly offshore and “would merely be moored onto various South African ports”, meaning the “ultimate benefit to be derived by the South African government and its people is of a limited nature and is reversible”. 

Karpowership SA managed to get a full local content exemption for all its ships from the Department of Trade, Industry and Competition (DTIC).

Mbalaiti comments: “Again, given the historic conduct of as well as the conduct surrounding [Karpowership SA’s] bid causes me to (verily) believe that this local content exemption was similarly unlawfully and/or irregularly granted.”

‘Last words’

DNG was, according to Mbalati, still confident of its prospects until the businessman allegedly close to Mantashe once again reached out on the eve of the winning bidders being announced.

“On or about 15 March 2021 [he] sent another message to me implying that [we] had won the Bid. However, he made it clear that should I not play ball with him and his associates, [DNG] would not receive the appointment as a Preferred Bidder, [DNG] would receive nothing and [DNG] would not be considered for any subsequent Tenders,” says Mbalati.

The night before the 18 March announcement of the preferred bidders, Mbalati says, he received a call from the businessman, “informing me that the announcement of the Preferred Bidders would be the next day”.

After that, he got a message from the businessman asking him to a meeting the next day.

“At or about 9h00 on about 18 March 2021 before the announcement of the Preferred Bidders, [he] attended at my offices enquiring whether I had any ‘last words’, to which I replied that I would await the outcome. In response, [he] told me that because of my answer, [DNG] would not receive anything.”

Mantashe’s announcement of the preferred bidders took place at 4pm that afternoon and Mbalati claims that it is only after his morning exchange with the minister’s alleged associate that DNG was suddenly informed that its projects were all disqualified due to unspecified failures to meet requirements.

After being notified of DNG’s disqualification, Mbalati says he received further communications from the businessman, “enquiring as to whether I had now, given the announcement, ‘learned my lesson’. This was directed at [DNG’s] refusal to engage with corruptive elements and individuals, and was a direct enquiry as to whether the [company] was now prepared to engage in underhanded and corruptive activity in order to secure future success in its bidding endeavours.”

Mbalati says that he secured a meeting with the DMRE’s independent power producer office a few weeks later to find out why DNG had been disqualified.

Despite DNG receiving and answering numerous technical questions from the DMRE after submitting its bid, Mbalati was belatedly told that his projects suffered from fundamental defects, which the department had not raised during the preceding correspondence.

DNG was now told it had “insufficient proof of ownership of the land rights in respect of the land to be utilised”; it had “insufficient proof of sufficient water supply to the proposed areas”; it failed to “provide for an uninterrupted fuel supply” and could not give comfort that its equity funders, which included Standard Bank and RMB, had the necessary balance sheet to fund the project.

“[DNG] has good reason to believe that undue influence played a decisive role… in the decision to disqualify [DNG] from the Tender process…. The decisions in respect of the disqualification of [DNG], are wrongful and unlawful and/or were made with ulterior motives in mind,” says Mbalati.

Mantashe said he was being dragged into the court case because “when people want to win bids, they do everything in their power”.
He added, “People can make allegations, and it’s good that people go to court because they will have to prove it.”

Nolwandle Mantashe also suggested that the matters would best be aired in court, saying she is “pleased that you mention that the matter is in court which will allow me to respond in a fair process not to a journalist”.

In a written response she made the following points:

  • I do not have a clue of the extension you talking about and am wondering how one can influence a technical process in a department where you are not even working in.
  • I was never approached by anyone about extension of a bid [deadline]
  • Hence i have said i was not approached there was no action to be taken
  • I did not engage my husband because no one approached me. Even if it had happened imagine talking about things happening in his office and me telling him what to do
  • I do not know Karpowership, therefore have no clue who their Directors are.
  • I have no interest of any kind in RMIPPPP.
  • This is a developing story. AmaBhungane will publish further comment, as it becomes available. DM
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All Comments 46

  • Astonishing. I hope he names and shames these “facilitators” that slither around the corridors of power – they are indeed the scourge of this country.

      • Indeed Rob. As tragic as it is to say, I have no doubt that any and every financially significant commercial arrangement between government and the private sector is shamelessly corrupt. It would be newsworthy to find any such deal that isn’t. But I salute team amaBhungane, please carry on digging!

  • How can an “emergency procurement” programme be awarded for 20 years? Is this an admission that the ANC will never solve its current problems?

    • Well spotted. I didn’t see that!! My walls against all anc business ventures, don’t let me see beyond: lutuli house = many hands out begging for cash or Bitcoin .
      I must widen my eyes again,this time for a karpowership to dock first.
      So sad. CryMyBelovedCountry.

  • Tenderpreneurship is alive and well….even under the nose of the Zondo commission! This blatant disregard for the ongoing systemic corruption taking place in this country is “mind boggling” I wonder when the taxpayers ( including me) will cry “enough” and do something about it! Getting close …

  • Honestly, who is surprised?
    This is one for Outa to tackle I am afraid. The EIA process is possibly the last course of resistance left.

  • Once again Mantashe’s name crops up. First he instructed ANC PM’s not to vote against Zuma at the latter’s impeachment proceedings. Then he allowed Bosasa’s Gavin Watson to do security upgrades at 3 houses. Then he testify at the Zondo commission defending Cadre deployment. Now this! What’s next?

    • He doesn’t understand that it’s wrong. His moral standards are extremely low and the concept of ethics is completely foreign.

  • This should not come as a surprise – it smells like the Gupta locomotive deal. Is it possible that while the ANC is under the spotlight for State Capture, its Ministers and Cadres remain busy with their looting and dishonesty – yes, certainly.

  • Is anyone surprised? Think about it… Where is the ANC going to get money for its upcoming election campaign (read T-shirts and bags of mealie meal for the poor electorate)?
    Kudos to Aldworth Mbalati for blowing the whistle! I hope he can afford body guards. ANC is a sick party making SA sicker!

  • If this one is allowed to proceed the President can forget all the talk of stopping corruption, as it is obviously endemic in his government. We should hire prosecutors from Angola not engineers from Cuba………by order of the IMF

  • This is an old ploy, complicated tender required, short lead time that no genuine tenderer can meet with a competent offer.
    Last min extension and change of scope
    all the work done by genuine tenderers wasted
    And the winner is, Voila !

  • Mantashe is one of the President’s Men! So much then for Cyril’s statements under oath to Zondo that the majority of ANC members are opposed to corruption!

  • Although any reasonable person will wait for the case’s outcome, the anc/government’s credibility is totally in tatters. Mantashe, one of the current president’s men, was also a zuma man. Alarm bells have been ringing all along. But our spineless president is as stone deaf as his party.

  • Shamila Batohi is probably the most useless person in this country.
    How is it that nobody is arrested yet? With all the evidence out there, not a single arrest and not a single orange jump-suit. She is pathetic.

    • I fully agree with you Nick. It is about time that the right thinking citizens of this country are standing up and be counted.

      • Possibly, the reason is that writing a book requires a relatively low bar of “evidence”. Taking that into a criminal court of law where your evidence is up against the likes of Hulley and Kemp A Kemp is a different ball game entirely. When these guys get to court the NPA must be certain of a win.

        • What grates me is that they are trying to prove the entire big picture against these criminals. Prosecute them on one slam dunk case, get them in jail and out of parliament and then add additional charges while they are in jail.

  • Outa – Paul O Sullivan help. A land based plant has always been considered as preferable by SA engineers to ships. Now we know why it was kicked out. After the recent PPE corruption it seems that every Rand spent by Government still has a corruption slant. Nothing has changed. So what is it out of every Rand there must be kickbacks of 20c, 30c, 40c? A good one for Cyril to prove his manhood.

  • If we absolutely must have energy auctions, please can we be sensible ?
    Best way to buy energy from IPPs
    1 Dynamic Pricing that recognises time & location value
    2 Proper Curtailment T&Cs
    3 Contribution to Tx Strengthening & Maintenance
    – 20 year fixed pricing +inflation is dumb

    • The merits (if any) and shortcomings of the winning tender are irrelevant Mike. Haven’t you being paying attention? Only the amount of public funds kicked back to into the trough for those greedy snouts counts, nothing else. What we see is PR smoke and mirrors from a well-oiled corruption machine.

  • This stinks. High-level corruption continues, even as the Zondo Commission lays it bare. That takes a certain brazenness; as we know, these operators don’t fear the prospect of reprisal. They have systems and people buttoned up. Definitely, one for amaBhungane to follow. We want answers. And names. And yes, Mantashe’s name keeps rolling in the credits.

  • This deal has been rotten from day one but it is only coming out into the open because one corruptor lost a lucrative deal to another corruptor that was prepared to pay a larger share of the excessive profits to the politicians and party.

  • This tender must be set aside, and an investigation into the conduct of the Minister, family members, DMR officials, and others conducted. This is not surprising, the deal was extremely suspicious. This corrupt deal must be stopped immediately. There is likely much more going on in the DMR!

  • Its like the pot calling the kettle black isn’t it? What is this honest Joe’s claim to electricity supply fame? The whole thing stinks.

  • I am high-jacking this article because DM ignored the criminal case against the speaker of parliament, Modise. She was found not guilty for blatant massive animal abuse. News24 reported no less that 250 comments on this. Yet, despite pleas to DM, they covered nothing! NOTHING!

  • Put out a R1m reward & immunity deal for the first three persons to come forward with information.

    Then subpoena and question under oath the bid committee and related officials, without them knowing who came forward.

    There is no honor among thieves …

  • It makes even more sense when taking into account the delays end problems other IPP experienced with regard to rollouts of IPP ‘ licences’. By not licensing wind and solar generation a gap for Kapower may have been created

  • So, CR presents the aromatic rose to Zondo, and ANC thorns get bigger. Local content (i.e. creation of jobs, development of skills, building our economy) is irrelevant to ANC without a kickback opportunity. After all the CR window-dressing, crony and family fat pockets are all that matter to ANC

  • One must question how overpriced this so called “emergency” power tender is to afford the kickbacks that are very likely to take place. And indeed, just how “emergency” can this project be that it runs for 20 years? The ANC is bankrupting this fabulous country, one questionable deal at a time!

  • Given that Cyril agreed (with a smile on his face…or was it a smirk?) that the Waterkloof landing “raised eyebrows” we can assume this will not register on the ANC dial of concern……