Outa asks Nersa for reasons behind approving Karpowership’s generation licences

Civil action body the Organisation Undoing Tax Abuse (Outa) says it wants to see the National Energy Regulator’s (Nersa) reasons for approving the controversial Karpowership generation licences.

It was reacting to Nersa’s approval on Tuesday of seven generation licence applications under the Department of Mineral Resources and Energy’s (DMRE) initiated emergency Risk Mitigation Independent Power Producer Procurement Programme.

Read: SA grants Turkey’s Karpowership licences for floating power generation

Karpowership, a subsidiary of the Turkish Karadeniz Energy Group, was selected by the DMRE as one of the preferred bidders of the programme in March and stands to become one of the biggest beneficiaries having secured the lion’s share of the bids.

This has seen Karpowership’s winning bids face much opposition, not only from Outa, but environmentalists, a losing bidder as well as opposition parties.

Karpowership’s plan would see three gas-to-electricity “power ships” being anchored in the ports of Richards Bay, Saldanha Bay and Coega (Eastern Cape). Around 1 220MW of electricity is planned to be generated between the three power ships, provided through floating storage and regasification power plants.

Read:

Nersa defers dispute over Karpowership

Karpowership SA licensing process ‘fatally flawed’ – lobby group

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

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

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

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

The organisation said that it “finds it inexplicable that Nersa granted the Karpowership licences while there are so many questions over the process and the Karpowership projects”.

These include:

• Environmental authorisation having been refused by the Department of Forestry, Fisheries and the Environment (DFFE)
• An internal appeal process by Karpowership still underway challenging the decision by DFFE
• Absence of a fuel supply agreement
• Absence of a fuel pipeline licence
• Absence of port authorisation (from Transnet)
• Eskom not agreeing to enter into a power purchase agreement; and,
• A legal challenge underway alleging failure of due process, corruption and nepotism that will only be heard by the court in early December 2021.

Read:

Karpowership remains ‘fully committed’ to SA projects

Environmental department rejects authorisation of Karpowership plan

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

However, for Karpowership, the @NERSA_ZA generation licences are moot, because:
• Environmental authorisation refused
• No fuel supply agreement
• No fuel pipeline licence
• No port authorisation
• No Eskom power purchase agreement
• Legal challenge by DNG Energy

— Chris Yelland (@chrisyelland) September 21, 2021

Meanwhile, Outa noted that during the recent public comment period, it had submitted a formal submission to Nersa opposing the Karpowership licences.

“There are also questions around the fairness of the bidding process after the DMRE [moved] the ‘immovable’ deadlines for financial closure of the projects after the bidding process closed. While government has claimed this is due to its own delays, Outa has previously pointed out that the Karpowership projects are far from ready to achieve financial closure.”

Read: IPP programme rollout in disarray