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Greasing the skids: Karpowership clinches last-minute ‘special directive’ from SA government

Greasing the skids: Karpowership clinches last-minute ‘special directive’ from SA government
From left: Former Transport Minister Fikile Mbalula. (Photo: Brenton Geach) | Karpowership SA director Mehmet Katmer. (Photo: Linkedin) | Minister of Transport Sindisiwe Chikunga. (Photo: Gallo Images / Beeld / Deaan Vivier)

The government appears to have rammed through a ‘special directive’ ordering Transnet to find harbour space for three Turkish gas-to-power ships in the Coega harbour for the next 20 years.

The directive seems to have been shoved through despite strong opposition from the national harbour authority. Until recently, the Transnet National Ports Authority (TNPA) made it clear it opposed any long-term plans to moor powerships in Coega because it had already earmarked limited harbour space for its own port expansion plans. Therefore, there was no room to accommodate three large ships indefinitely.

This was one of the main reasons Karpowership’s bid for environmental approval was rejected two months ago.

But now it has come to light that Karpowership lawyer Adam Gunn has written to Environment Minister Barbara Creecy, stating that the national Transport Minister has issued a directive in terms of Section 79 of the National Ports Act. Such a directive would compel Transnet to make way for the powerships. It also short-circuits other sections of the act that require a separate public consultation process when harbour space is leased to third parties.

Section 79 confers the Minister of Transport with special power to issue these directives to protect “national security” or to “promote the national, strategic or economic interests” of the country, even where this is not in the commercial interests of Transnet or could result in financial losses.

karpowership directive

Section 79 of the National Ports Act. (Image: Supplied)

But it remains unclear whether the directive was signed by newly appointed Transport Minister Sindiswe Chikunga or her predecessor Fikile Mbalula. Gunn has not disclosed the date on which it was signed.

Transnet has not responded to Daily Maverick’s repeated requests for comment since Thursday 11 May, while Chikunga’s department has also not responded to requests for clarity and confirmation sent on Friday afternoon, 12 May.

Karpowership insists it was “instructed” by Creecy’s department to not release a copy of its appeal document and annexures to the public and media, while Creecy’s department has also refused to release the appeal documents which were submitted to her office more than a month ago.

karpowership coega

An aerial view of Coega harbour showing the proposed position of the three Karpowership vessels in yellow. (Image: EIA report)

A spokesperson for the Department of Forestry, Fisheries and Environment suggested it would be “premature” to release the documents at this stage because Karpowership’s appeal application was submitted after the stipulated deadline and was therefore being held in abeyance until a decision was made on whether to accept or reject the company’s condonation request for extra time.

Last week in a further signal that the government is determined to approve the controversial “emergency power” plan come what may President Cyril Ramaphosa indicated his personal support during parliamentary question time by stating, “…what South Africa needs right now is emergency energy… Other countries have done so… They have brought in ships that are able to generate energy and immediately solved their energy problems and challenges.”

Considering Gunn’s written assurance to Creecy that he had only recently “officially received the Section 79 Directive from the Minister of Transport”, this suggests that Chikunga signed the Section 79 directive at the last minute possibly after Creecy’s department refused to authorise the Coega gas ship plan on 7 March.

karpowership gunn

A screenshot of an extract from Adam Gunn’s letter to Barbara Creecy.

Alternatively, former transport minister Mbalula may have signed the directive before the Cabinet reshuffle on 6 March, as Gunn indicates in his letter that, at some point after 7 March, Karpowership had “further continued with its communications with TNPA to ascertain how conflicting information had been provided to different parties”.

Either way, the belated use of a Section 79 directive opens the way for further legal challenges against the Karpowership approval process.

Invoking these special powers has been on the cards since at least May 2021, when Durban maritime law expert Andrew Pike warned against such a move in a legal opinion he prepared for Business Unity South Africa.

At the time, the Transport Department told Daily Maverick that Mbalula had not issued a directive yet, and it could not be issued before he had consulted Transnet and Public Enterprises Minister Pravin Gordhan. Thereafter, a Cabinet memorandum would be needed before a directive was issued.

Pike, a senior member of law firm Bowmans, suggested that, before issuing such a directive, the Minister of Transport would be required to follow a more onerous public consultation process. He cautioned that the legal authorisation strategies under discussion at that time were likely to be ruled unlawful unless the National Ports Act was amended.

Commenting, University of KwaZulu-Natal law expert Professor Michael Kidd said the legal wording of Section 79 requires the minister to show that his/her instructions to Transnet are strictly necessary to “promote the national, strategic or economic interests” of the country.

A ‘high bar’

“That is quite a high bar. This is obviously a higher legal standard than expedience or convenience and if it can be demonstrated that electricity/power issues can be resolved or at least alleviated by alternative (less potentially harmful) ways then the necessity of the directive will not be objectively demonstrable.” 

Further concerns have been raised by Dr Gary Koekemoer, chairperson of the Algoa Bay branch of the Wildlife and Environment Society of South Africa (Wessa). He said the Wessa branch was considering its legal options after Creecy’s department refused to provide him with a copy of Karpowership’s appeal documents and a copy of the Section 79 directive. 

Wessa lodged a Promotion of Administrative Justice Act application to Creecy’s department “to understand what communication was engaged in” between Karpowership and the department on the issue of Coega’s harbour expansion plans, as well as any other relevant communication between Karpowership, its environmental consultants (Triplo4), the Environment Department and TNPA on the same issue.

This was because Triplo4 had given assurances at a public meeting last year that Transnet was not opposed to the Karpowership plan in Coega.

“Without sight of the appeal itself, we are unable to assess whether the Section 79 directive is submitted simply to override the clear conflict with the port expansion plans, or whether (Karpowership) makes the case that the project will not conflict with port expansion plans,” Koekemoer said.

“Either way, the Coega port expansion is critical to the Nelson Mandela Bay metro’s economy, the Coega Development Corporation and the adjacent Economic Development Zone, and specific to several local pending issues such as the relocation of the tank farm from the Port Elizabeth port, the building of new manganese terminals, the capacity expansion of the port and more.

“The public have not been given the opportunity to comment on the impact of the project on the expansion plans.  As we understand it, the three Karpowerships cannot be relocated within the current port, and the berthing plan as per the application will render the northern expansion of the port impossible. The effect of that on the project and the port is material and of great public interest and should have formed part of the original application.

“Without sight of the Section 79 directive, we do not know when such a directive was issued, whether it is a generic directive or specific to the Port of Ngqura, or if it had any conditions attached? Again, it appears material to the appeal and in the public interest to be able to comment on such… Why was such a directive not submitted as part of the original application? (Karpowership) in its request for condonation does not explain why the directive held up the appeal submission.”

Koekemoer said Wessa and other parties were now being placed at a legal disadvantage because they were being denied access to new information presented by Karpowership after the environmental impact assessment process had been concluded.

In response to Koekemoer’s submission, a senior official wrote back suggesting that no parties would be deprived of their rights to comment on Karpowership’s legal appeal documents at a later stage, if the department agreed to condone its late submission.

“The appeal itself will remain in abeyance until such time as the condonation decision has been either granted or refused.” DM

 Transnet responds

[Gqeberha, 16 May 2023] Transnet National Ports Authority (TNPA) can confirm that it is in receipt of a directive issued by the Department of Transport in terms of Section 79 of the National Ports Act 12 of 2005. This directive is subject to certain conditions on which TNPA and Karpowership are engaging.

TNPA is not at liberty to provide a copy of the section 79 directive and at this stage it would be premature for the Ports Authority to express a view hereon.

The port development plan aimed at accommodating additional and much-needed liquid bulk handling facilities at the Port of Ngqura’s A100 location will continue as planned, in support of the regional industrial sector.

TNPA will continue to work with port stakeholders to ensure fairness and transparency in finding workable solutions.

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Comments - Please in order to comment.

  • Chris 123 says:

    Mission accomplished Gwende, your family can now retire. Destroy Eskom
    So you can come to the rescue with your Power Ships, a nice little earner.

  • Dennis Bailey says:

    Yep, another ANC F-up!

    • Kamohelo Tsele says:

      What!!!! For the ANC an absolute success. Greedy, fat tummy’s get dinner parties. The FU is for all the rest of us non citizens

  • Miles Japhet says:

    Have the commercial terms been scrutinised ?
    The strong preference for the Karpowerships suggests that there are middlemen linked to the ANC here and some offshore payments no doubt?
    Some investigation and disclosure required in the public interest.

    • Johan Buys says:

      Miles, it is unknown who the beneficial owners are of the 49% local partner of the project. It is also a redacted secret what we will pay for availability fees on the ships.

      • Scott Gordon says:

        We who actually pay their wages are treated like mushrooms . Who are their BEE compliant partners ?
        Funny thing about transparency , as such we can see what is happening .
        Is this still for 20 years , not a stop gap then .
        I could see a 5-7 year contract , how much to stave off loadshedding , 5-10-15 MW h at least . And the transmission lines to move it all around ? Nothing happening there .
        Going off grid is not an easy choice , thanks to the ANC , break even for me is no longer 10 -15 years , now 5-7 , yes DIY .
        The more it happens Escom gets less revenue , Kusile and Medupi even when working do not pay their way .

    • Peter Oosthuizen says:

      Middlemen linked to the ANC? You cannot be serious! That would imply corruption at the highest level which is unheard of in SA 🙂 🙂

  • David Mitchley says:

    These power ships haven’t helped in Mozambique or Ghana, both countries still experience erratic power supply.
    How do the powers that be propose getting the electricity generated to where it is needed since the grid is already almost at capacity?
    Surely this money could be better spent by constructing our own open gas turbine power stations on land, something the country will still have post the 20 year powership contract.

    • Martin S says:

      I have exactly the same question: We are being told that there is not enough capacity in the Northern Cape to connect much more solar farms and that there is only a bit more in the Eastern Cape for wind power. Suddenly, by ANC magic science, there is so much capacity that the entire country’s power problems can be alleviated by connecting to the Eastern Cape grid. Or are we going to pay for power generating capacity provided and not power provided onto the grid, as it will be even more profitable…..?

      • Scott Gordon says:

        Yes , so much for the splitting up of ESCON and getting the power lines where the power can be supplied . Sure , go ahead and spend millions and not be able to connect to the grid 🙂

  • Johan Buys says:

    it would be so much better for SA if treasury just simply paid the ANC R1m per day to NOT push this stupid project

    Karpowership should take a morning and see what corruption cost bigger smarter global firms like ABB, SAP etc etc when courts overturned corrupt contracts.

  • Johan Buys says:

    a court review should consider the need for the directive not only against renewables but against the cost and speed with which land-based projects could help the power shortage.

    We have natural gas (Renergen in the Free State).

    We can buy turnkey land based gas power for about R15b per GW and have them installed faster than Karpowership can het their three contested ships in place.

    Though the actual price Karpowerships will charge for availability fees is a state secret, their projects in Lebanon and Pakistan showed that the host nations could have bought and owned the plant every three years’ worth of availability feeds.

    For sure this instruction is challenged and thrown out of court for irrationality.

  • Colleen Dardagan says:

    The End!

  • William Kelly says:

    And here we go. Emergency power for 20 years?!? And at what price? Oh yes, whatever price they set it at! If I were the cANCer I’d set my sights on collecting the bribe money upfront. If I were Karpowership I’d set my sights on paying as little as possoble given the risk that the cANCer is voted out and my contracts running the risk of being cancelled. That, or bind the country into inescapable lock in clauses that make it super expensive to withdraw from.

  • stefan.hartman says:

    Can’t help but feel the continuous Stage 6 and 4 hour shedding during peak hours for households getting ready for school and preparing supper at night, is to validate another clear forceful push through of corrupt deals where someone in government is surely going to benefit!!

  • Gregory Scott says:

    Yip, and there it is, the gravy train so desperately needed by the ANC is on track again.
    How perfect? Create the disaster and make money, then provide the solution and again make oodles of money.

  • Dave Martin says:

    Please can the Karpowerships stories be reported on in a less biased manner? We are in an existential crisis and need new generation capacity ASAP. Karpowerships is one of very few options available to us. But these reports always seem to be slanted as if the only justification for using them is inherently corrupt.

    Everyone, including the President, agree that the contracts should be short term. Let’s push for transparency on costs. But there appears to be a concerted effort to prevent them being used on spurious environmental grounds.

  • Mpumi Bikitsha says:

    This Kapowership deal seems to be someone’s huge tablespoon for munching. There’s absolutely no shame now and the corruptors have their grease ready for some big wig’s hands. Lord have mercy!!!😭

  • Kamohelo Tsele says:

    I would not want to bet that these power ships will solve loadshedding. ANC needs to be seen to be doing something. Using ministerial powers of dictatorship is the way to go. Same type of democracy as our friends in Russia. You get to vote for the ANC and they get to do what they please to keep black industrialists (oligarchs in Russia) happy.

  • Brian Doyle says:

    Business and the Independent organisations who have legal know how and money should immediately challenge this decision, which is contrary to all the previous discussions and decisions about using these ships to “sort out our electricity supply problems”. The money spent on them could be better used in sorting out the electricity prolems. Gwende Mantashe should not be allowed to push this through

  • Rae Earl says:

    Projected to cost SA around R218 billion for a 20 year contract. Yummy for the ANC oligarchs as the ‘commission’ on the deal will probably be considerable and hidden in bank accounts in Turkey. Add to this the estimated R259 billion NHI project being urged by Ramaphosa, and the pickings will be anything but lean.

  • this is a shocking abuse of power! I hope this goes viral on SM and causes an outcry!

  • Kamohelo Tsele says:

    Test

  • Kamohelo Tsele says:

    What I had against it from the outset was the 20 year contract. If the contract was for 5 years to be renewed if necessary but 20 for years, I smell a rat. Some people are pocketing heavily in this deal.

    I hope somebody will take this to court.

    • John Strydom says:

      Yup, that has been my concern too.
      And when Gwede tested the idea of maybe 10 years, to soften the public to the idea, it became clear to me that he, and only he, is the middleman we should be watching very closely.

  • Brian Cotter says:

    Ms Sindisiwe Lydia Chikunga was appointed Minister of Transport on 6 March 2023. She was Deputy Minister of Transport from 5 August 2021 to 6 March 2023.
    Notwithstanding Fikile approving or not Lydia would be under instruction anyway to sign off as part of the handover as she was Deputy Minister anyway and knew everything was at stake. No wonder it was a move up and not a transfer from another Ministry. Karpowership is KING.

  • David Mark says:

    Anc: “We’ve heard you, and we’re no longer riding the gravy train! Vote for us now please.”

    SA public: “Ja but the ship? That as corrupt as can be!?”

    ANC: “OMG, you people are impossible to please! You had a problem with the gravy train, so we stopped that and the entirety of prasa as well just by the way! You never said anything about not wanting us to enjoy a gravy ship!”

  • Auke Van Der Meulen Van Der Meulen says:

    The urgency to get this deal through is not to help alleviating load-shedding but to getting it done before the ANC looses in the next election.

  • Riel Meynhardt says:

    Thieves in suits – one and all!!!

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