Wednesday, January 19

Outa asks Nersa the reasons behind the approval of Karpowership’s generation licenses

The civil action body, the Organization Undoing Tax Abuse (Outa), says it wants to see the reasons from the National Energy Regulator (Nersa) to approve the controversial generation licenses of Karpowership.

It was reacting to Nersa’s approval Tuesday of seven generation license applications under the Emergency Risk Mitigation Independent Power Producer Acquisition Program (DMRE) initiated by the Department of Mineral Resources and Energy.


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Read: SA Grants Turkey Karpowership Licenses for Floating Power Generation

Karpowership, a subsidiary of the Turkish group Karadeniz Energy Group, was selected by DMRE as one of the preferred bidders for the program in March and will become one of the largest beneficiaries having won the majority of tenders.

This has made Karpowership’s winning bids face a lot of opposition, not only from Outa, but also from environmentalists, a losing bidder, and opposition parties.

Karpowership’s plan calls for the anchoring of three gas-to-electricity “power ships” in the ports of Richards Bay, Saldanha Bay and Coega (Eastern Cape). It is planned to generate around 1,220 MW of electricity between the three motor boats, through regasification and floating storage power plants.


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According to Outa, the 20-year power supply deal could cost up to R218 billion.

“Outa finds it unacceptable that Nersa approves generation licenses but does not immediately provide the public with the reasons. How are these projects approved if the reasons for the decisions are not carefully considered and written? “he questioned in a statement.

“The public has the right to know why these decisions are made….

“These reasons are also necessary if the decisions are to be challenged in court. This lack of transparency has been a constant problem in this process, ”added Outa.

The organization said it “finds it inexplicable that Nersa has licensed Karpowership while there are so many questions about the Karpowership process and projects.”

These include:

  • Environmental authorization denied by the Department of Forestry, Fisheries and the Environment (DFFE)
  • An internal appeal process by Karpowership is still ongoing challenging DFFE’s decision.
  • Absence of fuel supply contract
  • Absence of a pipeline license
  • Lack of port authorization (from Transnet)
  • Eskom does not agree to enter into a power purchase agreement; and,
  • An ongoing legal challenge alleging breach of due process, corruption and nepotism that will only be heard by the court in early December 2021.


Karpowership remains ‘fully committed’ to South African projects

The environment department rejects the authorization of the Karpowership plan

Energy analyst Chris Yelland also raised similar questions, following news of Nersa’s approval on Tuesday.

Meanwhile, Outa noted that during the recent public comment period, he had made a formal presentation to Nersa opposing Karpowership licenses.

“There are also doubts about the fairness of the bidding process after the DMRE [moved] the “fixed” deadlines for the financial closure of the projects once the bidding process is closed. While the government has claimed this is due to its own delays, Outa has previously noted that the Karpowership projects are far from ready for financial closure. ”

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