Our Burning Planet

OUR BURNING PLANET

Karpowership wins last-minute Nersa approval – but environment minister Barbara Creecy is yet to weigh in

The decision to grant three electricity licences to the Karpowership SA subsidiary company was confirmed on Tuesday night by Nersa spokesperson Charles Hlebela. (Photo: Wikipedia)
By Tony Carnie
21 Sep 2021 29

With barely a week to go before another ‘non-negotiable’ government deadline expires, time is running very short as a Turkish gas-to-power company enters the final lap of a hurdles race with nearly R228bn in prize money waiting at the finish line. But Karpowership could still fall flat on its face.

The Turkish-based Karadeniz group has been granted three gas-to-electricity generation licences by the National Energy Regulator of SA (Nersa), clearing one of the last regulatory hurdles in its quest to anchor several “emergency” powerships in South African ports for the next 20 years.

The decision to grant three electricity licences to the Karpowership SA subsidiary company was confirmed on Tuesday night by Nersa spokesperson Charles Hlebela, who said that a statement providing reasons for the decision would be issued “shortly”.

Energy Minister Gwede Mantashe had previously emphasised that he would tolerate no delay from all the companies lined up as preferred power-generation bidders, including Karpowership.

“The preferred bidders are required to reach financial close by no later than the end of July 2021. Due to the urgency to bring power online, this date is not negotiable. It is for the preferred bidders to manage all the risks to reach financial close,” he said in a media statement on 18 March.

But that deadline became somewhat elastic when Karpowership failed to win mandatory environmental approval from senior officials of the Department of Forestry, Fisheries and the Environment.

When they rejected the Karpowership environmental impact assessment (EIA), Mantashe’s officials inexplicably extended their own financial closure deadline to September 30 – apparently on the basis that the energy department itself (not Karpowership) had been somewhat dilatory.

Late on 21 September, the Organisation Undoing Tax Abuse (Outa) called on Nersa to release its full reasons for granting licences to Karpowership.

“Outa finds it unacceptable that Nersa approves the generation licences but fails to provide the public with reasons immediately. How are these projects approved if the reasons for decisions are not carefully considered and written up?

“The public has a right to know why these decisions are made. These reasons are also required if the decisions are to be challenged in court. This lack of transparency has been an ongoing problem in this process,” Outa said in a statement.

It was “inexplicable” that Nersa granted the Karpowership licences while there were so many outstanding issues and questions over the process and the Karpowership projects. These included:

  • Environmental authorisation had been refused by the Department of Forestry, Fisheries and the Environment (DFFE);
  • The internal appeal process by Karpowership was still under way challenging the decision by the DFFE;
  • The apparent absence of a fuel supply agreement;
  • The absence of a fuel pipeline licence; and
  • The absence of port authorisation.

It suggested that Eskom had also not agreed to enter into a power purchase agreement with Karpowership.

“A legal challenge is under way alleging failure of due process, corruption and nepotism that will only be heard by the court in early December 2021.

“There are also questions around the fairness of the bidding process after the Department of Mineral Resources and Energy (DMRE) moved the ‘immovable’ deadlines for financial closure of the projects after the bidding process closed. While government has claimed this is due to its own delays, Outa has previously pointed out that the Karpowership projects are far from ready to achieve financial closure.” 

Now, with the clock ticking fast, the attention switches to Environment Minister Barbara Creecy.

Last year, after Our Burning Planet exposed an irregular bid by Karpowership to be exempted from a mandatory EIA and public participation process, Creecy acted firmly and compelled the company to go by the book.   

Given her department’s emphatic rejection of Karpowership’s belated and flawed EIA study, on what basis can Creecy now form a different view to her senior officials?

At the time of publication, Nersa had not issued a written statement on its reasons for approving the generation licences.

Shortly after 7pm on Tuesday, Nersa said:

“The National Energy Regulator of South Africa (NERSA) confirms that based on the available information and analysis conducted on the applications for generation licences by the seven Risk Mitigation Independent Power Producer Procurement Programme (RMIPPPP) preferred bidders, at its meeting held today, 21 September 2021, the Energy Regulator has approved the issuing of generation licences for the seven RMIPPPP preferred bidders.

The seven RMIPPPP preferred bidders are:

  1. Oya Energy (Pty) Ltd
  2. Umoyilanga (Pty) Ltd
  3. ACWA Power Project DAO (Pty) Ltd
  4. Mulilo Total Hydra Storage (Pty) Ltd
  5. Karpowership SA Coega (RF) (Pty) Ltd
  6. Karpowership SA Richards Bay (RF) (Pty) Ltd
  7. Karpowership SA Saldanha (RF) (Pty) Ltd

“The Decision and Reasons for Decision (RfD) will be available on the NERSA website www.nersa.org.za in due course.” DM/OBP

Gallery
Absa OBP

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All Comments 29

    • Anything and almost everything that has happened under the watch of the anc has been disgusting. It’s in their DNA – they have no regard whatsoever for SA and the people here.

  • Barbara Creecy has done a much better job than her predecessors despite being under lots of pressure. However, this is Mantashe’s pension and I doubt she has the political clout to block it

      • …and I wouldn’t be surprised if CR does the same again, too much money involved, he is not going to risk that cANCer has to write this off…when it comes to ‘greasing hands to get a deal’ (aka corruption) Turkey ranks alongside Nigeria, Mozambique, UAE etc. I have been there on numerous occasions on business…without ‘greasing hands’ you don’t get the deal, even with greasing hands you may end up not getting the deal and, nogal, they don’t even refund the grease!

  • Another arms deal unfolding, no transparency, public fed crumbs as Mantasha forces his will, at our cost, on the country. Previous articles on this issue also indicated a number of questionable processes and actions have been taken by Mantashe and his crew to ensure that Karpowership is successful in landing this contract. The question that must be answered, what drives Mantashe to be so emphatic in making this decision that he dismisses and ignores the views and qualified comment from the experts in this field? There must be a money trail somewhere, better we flush it out now, before it is too late – someone is benefitting, start tracing the money flow now. Unless, of course, you believe Mantashe is being open, honest and really acting the best interests of South Africa. Put me down as a NO on that one !!

    • The tragedy is that so much damage can be done by one man or just a few individuals serving their own narrow interests. When they are dead and gone we will still be paying the price for years to come.

    • Absolutely agree. This is very suspicious, to say the least. I’m supporting OUTA to the hilt with financial contributions. Please consider doing the same.

  • Mantashe at his classic, confusing “best”. His track record in DMR is abysmal with all the global mining leaders having disinfected in SA. How does he hold onto his job not forgetting he has probably never run a business?

  • It never ceases to amaze me, that in the “New Dawn”, the old issues that supposedly were being brought to an end with the, “Life – Esidimeni Commission”, are still arising, is there a common denominator?

  • This smells of a SANRAL fiasco in the making again – project forced regardless of all recommendations and it will die due to lack of funding after the relevant parties have scurried of with the loot. 20 years is NOT and emergency plan, it is a cop-out by people too lazy to look at all the REAL solutions we already have in this country. VERY easy to spend money if is not yours……..

  • Utterly sickening rotten to the core….disgrace….. i think its time communities stand up against this blatant theft and disregard of our economy and OUR taxes.

  • I tend to agree with Stalker on Creecy’s lack of political clout to veto the Karpowership deal. I thought the idea was to move to renewable sources of energy, so why would the government be signing licences over to a concept that will belch toxic diesel fumes into the atmosphere and be extremely harmful to marine life??
    As with everything these thieves touch, there is a lot of money being made for a select groups’ back pockets on this one. WILL THIS SUBVERSIVE ACTIVITY AND OUTRIGHT THEFT ON THE PART OF THE ANC PURSE STRING HOLDERS EVER END!!!! I certainly don’t see that happening in our lifetime

    • Barbara might or might not be bullied in Cabinet.
      I suspect the former, but she ain’t no fool.
      It’s might though be up to De Ruyter to say no thanks, we have other plans.
      Classic CEO/shareholder high noon.

  • Where is the financial closure commitment by banks for the Karpowerships …?
    Can Nersa even make a legal decision without these in place?
    Certainly all renewable energy projects MUST have these in place, otherwise their applications are simply rejected.
    This Karpowerships approval looks very irregular.
    We really really need our agencies & authorities to be squeaky clean and consistent.

  • Environmentally Richards bay, coega and saldanha could be seen as industrial ports already. But some huge shortcuts to say that. The main concern is the financial one. Who is carrying the Forex risk, the gas price risk? Johnny tax payer

  • Apart from the environmental impact these ships will have to our coastal areas and the marine life, one has to wonder where the R228b is going to come from? At this rate there won’t be any taxpayers left in the country to pay for it!
    I can only think that this is just another thieving tender opportunity….the ANC aren’t even embarrassed enough to hide it! Emboldened by the billions they’ve already stolen under the guise of “RET” the ANC hierarchy continue to look for more looting opportunities! This one just takes the cake however….I’m just not sure how much futher you can push the taxpayer!