S African government grants Karpowership port access

Turkish firm Karpowership's bid to provide emergency electricity to South Africa using gas-fired power ships has received a major boost after it emerged that it has been granted access to three ports for 20 years.

Former transport minister Fikile Mbalula approved Karpowership's application for access to the ports of Ngqura (Coega) in the Eastern Cape, as well as at Saldanha Bay in the Western Cape and Richards Bay in KwaZulu-Natal.

The minister directed state-owned logistics operator Transnet to find harbour space for Karpowership's vessels at the ports. The section 79 directive was issued on 26 February, but the transport department only divulged the information last week.

The minister considered the application "to safeguard the country's national security", the transport department said.

Karpowership was selected in March 2021 as one of 11 preferred bidders to provide 1.22GW — nearly two-thirds of the overall tender — under an emergency power programme aimed at alleviating the regular rolling blackouts that are crippling South Africa's economy.

But the transport minister's directive remains subject to all other governmental approvals such as environmental authorisation, the department said.

Karpowership is still struggling to obtain approval from the Department of Forestry, Fisheries and the Environment (DFFE) for its projects.

On 7 March, the DFFE rejected the Ngqura proposal because the location of Karpowership's vessels would conflict with a planned port development, which includes a liquid bulk terminal. But today it emerged that the DFFE has allowed extra time for its decision to be appealed.

Port authority the TNPA said the transport minister's directive is subject to certain conditions on which it was engaging with Karpowership. But the plan to build a new liquid bulk terminal at the Port of Ngqura will continue as planned and it will "work with port stakeholders to ensure fairness and transparency in finding workable solutions."

At Ngqura and Saldanha, the transport minister's directive is subject to the use of LNG facilities that state-owned entities the Strategic Fuel Fund and the Central Energy Fund plan to build.

Opposition party the Democratic Alliance (DA) has submitted a Promotion of Access to Information Act (PAIA) application to obtain a record of the transport ministry's decision. Specifically, it wants "a record of the objections that were reportedly raised by the TNPA and why they were discarded".

Previously, the DFFE temporarily suspended Karpowership's application for authorisation of its Saldanha Bay project amid allegations of fraud, but the department has since dismissed these allegations.

On 2 March, Karpowership's environmental consultant Triplo4 withdrew its environmental impact assessment report (EIAr) for the Richards Bay project because it needed to engage more key interested and affected parties in the public participation process. The next day, the DFFE granted Triplo4 extra time for the submission of this EIAr.

Karpowership's controversial multi-billion rand contract award was beset from the start by allegations of corruption, government interference and claims that the bid process was rigged in favour of the Turkish firm.

At the time, the deal — including the projected cost of supplying LNG to Karpowership's projects over the 20-year contract period — was valued at more than 200bn rand ($12.5bn). But in the interim, global LNG prices have spiked significantly, while the rand has weakened.

As a result, the cost of the Karpowership deal could now be as high as R500bn, according to civil society group the Organisation Undoing Tax Abuse (Outa).

Outa and environmental justice group Green Connection are pursuing separate lawsuits to force energy regulator Nersa to annul generation licences it granted to Karpowership.

Green Connection has applied for Nersa to release the records of its decision, including data about Karpowership's pricing that is linked to the global gas price and rand-dollar exchange rate. It expects this application to be heard in September and for the main case to take another year to conclude.

The DA party has said it would contest any decision to "burden the fiscus" with such an "outrageously expensive" contract. At the most, the contract should only be five years, it said.

The fact that Karpowership failed to reach financial close by a specified deadline was "now being deliberately overlooked", the DA added. This "raises questions about how the rules have been bent to accommodate Karpowership."

Both President Cyril Ramaphosa and minerals and energy minister Gwede Mantashe have publicly backed Karpowership's proposed projects as a solution to South Africa's power cuts.

By Elaine Mills