Outa takes regulator to court over Karpowership approvals

April 28, 2022 Siyabonga Mtangana

The Organisation Undoing Tax Abuse (Outa) has filed papers at the high court in Pretoria challenging energy regulator Nersa’s decision to approve the construction of floating gas power stations in three South African ports.

Outa said at a media conference on Thursday that the 20-year deal with Karpowership SA will cost the country dearly – “objectively more than R200-billion”, it said – and that Nersa “did not act in the interests of South Africa” in granting the licences.

Outa executive director Stefanie Fick said the application, which was brought under the Promotion of Administrative Justice Act, accuses Nersa of failing properly to exercise its mandate in terms of the Electricity Regulation Act.

“Nersa failed to provide a meaningful response to public concerns and objections, effectively undermining the public participation process. Nersa simply brushed assigned the public’s objections,” she said.

Fick said:

Nersa displayed a cavalier attitude towards statutory compliance and public concerns throughout its decision-making process to award generation licences to Karpowership.
The regulator failed to fulfil its oversight functions and did not provide the necessary independent checks and balances to ensure that the interests of electricity suppliers are balanced with the interests of customers, the public and the South African economy.
The decisions to award the licences to Karpowership for generation at Coega, Saldanha Bay and Richards Bay were irrational and unreasonable.

Outa wants the court to review and set aside Nersa’s decision to award generation licences to the three Karpowership projects and order it to reconsider these decisions.

Fick said Nersa’s “lack of transparency on the financial information raises concern about the effect on the public”. She claimed the regulator “failed to deal with the issue of price variation in circumstances where prices over the next 20 years will be dependent on the US dollar price. This causes uncertainty and may come at tremendous costs for the South African public.”

TechCentral has asked Nersa for comment on Outa’s lawsuit, and the allegations it has made against the regulator, and will update this article once feedback has been received.

Championed

The department of mineral resources & energy has championed the Karpowership project as a way of reducing the impact of electricity shortages in South Africa. The ships are meant to provide South Africa with up to 2GW of “emergency” power.

But the project has run into numerous hurdles, including an inability (so far) to secure environmental and mooring permits.

The latest stumbling block is a demand by Eskom to indemnify the state-owned power utility against adverse outcomes from corruption allegations. Bloomberg News reported earlier this week, citing people familiar with the situation, that Karpowership has declined to sign an indemnity clause. — (c) 2022 NewsCentral Media