Karpowership demands retraction from former Eskom chief, denies it is corrupt

Karpowership, the Turkish company seeking to supply power to South Africa, said it will demand a retraction from Andre de Ruyter, the former chief executive officer of Eskom, because it said he had inferred the firm was corrupt.

The company, which generates electricity from ship-mounted, gas-fired power plants, in 2021 won about 60% of an emergency tender seeking to secure 2 000 megawatts of power to ease shortages that have plagued South Africa for almost 15 years. Court challenges from rival bidders and environmentalists and a yet-to-be resolved delay in getting Eskom, the national power utility, to sign a power-purchase agreement have stalled the deal.

In an wide-ranging interview broadcast on South Africa’s ETV television channel on February 21, De Ruyter said a search on Karpowership would reveal that “there is an extensive legacy of alleged corruption, breaches of contract and abuse” when it comes to the company’s dealings with countries that have used its ships.

De Ruyter’s comments “inferred, if not directly represented, that Karpowership is corrupt,” the company said in a statement sent to Bloomberg. “Karpowership unequivocally and unconditionally denies any allegations of impropriety on its part and rejects and dismisses insinuations of corruption.”

The interview, in which De Ruyter also said Eskom had fallen victim to corruption involving officials from the ruling African National Congress, has seen the former CEO attacked by government ministers who questioned his motives and blamed him for power cuts. While he was due to leave at the end of March, Eskom’s board asked him to leave the day after the interview was broadcast. Opposition parties, the ANC and labour unions have demanded he reveal who he was implicating.

De Ruyter didn’t immediately respond to an email and text message from Bloomberg seeking a response.

The government’s decision to award Karpowership the bulk of the emergency tender met stiff opposition from climate activists and other civil society organisations because of the cost of the 20-year contract and the potential environmental impact the three power plants would have.

“There is absolutely no justification for concluding a 20-year agreement with a company that can raise the anchor, literally, and literally sail away with the asset the country has paid for,” De Ruyter said in the interview.

The Turkish company said the government would be paying for the power and not the assets, and it was assuming all of the risk as it would need to meet strict performance requirements.

“Defaulting on the power purchase agreement would not only give rise to damages for breach of contract, but very significantly would mean that Karpowership would not recover anything for a significant upfront investment,” the company said.

It also said Eskom’s demand that it sign an indemnity agreement, when none had been requested from other successful bidders in the tender, was irregular. Nevertheless it had offered to make amendments to “the power purchase agreement anti-corruption undertakings,” and provide indemnity for any legal costs the utility might incur.