South Africa power contracts face legal challenge over ‘corruption’

DNG Energy, a South African gas company, has sued to halt the government’s award of emergency power supply contracts, alleging that the process was tainted by corruption.

Some of the eight bid winners, especially Turkey’s Karpowership, which operates mobile, vessel-based power plants, were granted unlawful exemptions from the tender requirements, DNG said in court documents. Its lawsuit could hamper attempts to bring new-generation capacity online and address a crisis that’s seen state utility Eskom subjecting the nation to intermittent electricity outages.

Aldworth Mbalati, DNG’s executive director, said in an affidavit to the high court that he was approached by a businessman with “close ties” to energy minister Gwede Mantashe and government officials who offered assistance to win a contract. Mbalati said he was told the outcome would be pre-determined, but rejected their proposal, according to the affidavit. He didn’t identify the people who approached him because he intends filing a criminal complaint.

A Karpower spokesman at its headquarters in Turkey, which is under a national coronavirus lockdown, couldn’t immediately be reached for comment. A company representative also wasn’t immediately able to comment when contacted on their mobile phone. Sechaba Moletsane, one of three directors of Karpower’s local partner Powerships SA, didn’t answer a call to his mobile phone or respond immediately to a text message and an e-mail requesting comment.

The tender winners have been contracted to generate 1.8GW of electricity by August next year, projects the government expects to bring in R45-billion of investment. The deals have yet to reach financial close.

Two decades

Karpowership, a unit of the Turkish Karadeniz Energy Group, won the bulk of the contracts, which will run for two decades — a deal worth an estimated R218-billion. That’s sparked concerns that the country’s may fail to reach carbon emission reduction targets.

“People who go to court are answered in court,” Mantashe said by phone. “Editors are not judges.”

His spokesman, Nathi Shabangu, said the department of mineral resources & energy, which Mantashe oversees, or the Independent Power Procurement Office will issue a statement on Friday.

The Democratic Alliance on Thursday had a motion, backed by environmental activists, to have a parliamentary probe of the contract rejected.

Karpowership was granted exemptions with regard to conducting environmental assessments prior to submitting a bid as well as a so-called local content requirement, designed to stimulate South African business.

The power vessels supplied by Karpowership “were originally designed to supply electricity to countries with little to no electrical infrastructure such as war-torn countries, or countries which had suffered natural disasters,” DNG said. “The fact that these ‘short-term emergency ships’ would operate for 20 years in three critical ports further prejudices the development of liquefied natural gas terminals and severely prejudices the development of a gas economy.”

AmaBhungane reported on the court documents earlier on Friday.  — Reported by Antony Sguazzin, (c) 2021 Bloomberg LP