Eskom seeks indemnity from Karpowership in power-purchase pact

South Africa’s bid to secure 2,000 megawatts of so-called emergency electricity has hit an obstacle, with the state power utility asking the biggest winner of the tender to indemnify it against any adverse outcomes from corruption allegations, two people familiar with the situation said.

A losing bidder, DNG Power Holdings, alleged in a lawsuit that government officials acted corruptly in awarding Turkey’s Karpowership about 60% of the tender that will see it supplying energy from three ship-mounted power plants off the South African coast. While DNG, which demanded that it replace Karpowership, lost the High Court case in January it has been allowed to appeal.

The government and Karpowership have denied wrongdoing.

Karpowership has declined to sign an indemnity clause, the people said, asking not to be identified because the discussions have not been made public. Eskom has yet to revert with a new proposal they said. Eskom, South Africa’s national power utility, and Karpowership declined to comment.

The process of securing the extra power in a country that’s been hit by intermittent power outages for more than a decade has been a fraught one since the contracts were awarded in April last year. In addition to the court case, which initially stopped all the winning bidders from completing their financial arrangements, Karpowership has yet to win environmental approval or the right to moor its ships in South Africa’s ports.

Eskom has yet to sign power-purchase agreements with any of the winning groups, which include TotalEnergies SE, Electricite de France SA, Scatec ASA and Acwa Power Co.

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