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

The energy regulator approved seven emergency power generation licence applications on Tuesday as part of the government’s Risk Mitigation Independent Power Producer Procurement Programme.

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.


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.


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.

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



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I know what happened. Left all the work till the last minute. And approved a bunch if documents on the table. Now have to answer as to why those were approved.

The large brown suitcases were full of enough stuff — That’s why !!!

NERSA, is supposed to be an INDEPENDENT, IMPARTIAL sector regulator, but funded by govt. Just like communications regulator ICASA.
It is supposed to keep within govt regulated frameworks and laws, but still keep the interests of citizens, corporates and govt in balance, for the long term. And in especially the funding side things maybe have to change.
In this specific case NERSA has clearly only acted in the interest of the ANC cronies and cadres, NOT in the interest of the nation as a whole, and it’s long term future.
Feel free to read my comment below :
I have not only been very interested in developments in the energy sector over the last 6,7 years but even longer since 2009 in the technical, political and organisational aspects of the massive changes in the telecoms sector.
The decision of the newly formed ICASA in 2001 to NOT object the agreement between VC and MTN to raise unilaterally the MTRs, the mobile termination rates, also labeled interconnection fees from 20 to 125/min shortly after Cell C obtained their license, but was not yet operating yet, proved on hindsight one of the main reasons why cellular rates remained so high until 2010. High interconnection fees enormously favour the large incumbent cellular companies, but make it nearly impossible for newcomers to make any decent returns.
After ICASA was finally FORCED by political pressure and activists to slowly decrease the the MTRs from 2009 onwards, the smaller operators Cell C and 8ta ( from Oct 2010), later Telkom Mobile, started a bit of a price war, which caused prices to tumble and finally put pressure on the mobile duopoly.
Up till 2010 MTN and VC made an absolute killing, and SA ” enjoyed” some of the highest cellular rates in the world.
Independent, impartial regulation is important, but surely must not be over arching, intrusive.
I guess, it is a bit like refereeing in football or rugby. It must not interrupt the game too much, and certainly not influence the outcome.

Correct, it conveniently opens the door for further corruption between the two parties involved… simple as that!

“Outa asks Nersa for reasons behind approving Karpowership’s generation licences” . . . simple explanation. Lots of moola changed hands behind the scenes. Why else would a government agency act?

Why on earth would our majestic president allow his subordinate, Gwede Mantashe, to bulldozer through a R200 billion deal that everyone knows is fraught with corruption and will lead to further financial ruin?

The answer can only be that Ramaphosa gave his tacit approval for a R200 billion corrupt powership deal that will lead to further financial ruin.

Well, I can think of two reasons
i The ANC is broke and needs a cash injection.
ii The Gewde Mantashe retirement plan needs a cash injection

I think so more the former. A percentage goes to Loothuli House to fund day to day operations and electioneering

Cyril Ramaphosa also behind the Jacob Zuma release and transfer of Frazer to Correctional services….

All this is well planned

This turn of events is deeply concerning and along with the revived talks of nuclear power plants, needs to be closely scrutinised.

DD Mabuza’s mysterious trip to Russia?
Gwede’s unexplained extended deadlines, opening the back door for Karpower?

These things are no coincidence.

We know that the ANC is cash-strapped, so why has the issue of no money for salaries suddenly disappeared. (They not even trying to be subtle about it these days)

Nothing like lining up a couple of quick multi-billion rand deals for “preferred bidders” in order to revive ANC coffers and put a few extra rands in the cadre’s pockets.

Meanwhile “Joe-Public” is being distracted by the publication of a controversial green paper on social security and retirement reform (no better way to stir things up), as well as the circus that is supposedly a corruption trial that won’t come to anything.

Either way Gweded Mantashe was going to have his way…

NERSA Compromised!
DMRE Compromised!

Approved under some Emergency clause?
Absolutely no long term planning for the country.

Thank God for Chris Yelland (Excellent Reporting!) and OUTA.
How does the ordinary citizen stand up to this Behaviour????

Cut the TAX Revenue cord???

Quantify the number of jobs that could be created with that amount of money. Cost R218,000,000,000 / 20 years = R10,900,000,00 / Investment Cost Per job R620,000 = 17,580 jobs that could have been created locally.

Puting it slightly differently, it costs about $1.06 per commercial business to procure 1 watt from solar panels: $1.06 x R15 = R15.9 x 1,000,000 (watt to megawatt) = R15,900,000 Per Mega Watt x 1,220 = R19,398,000,000. The ships are costing roughly 11 times what we would get from solar panels

And after the 20 years are up we do not have a single asset to show for it…

This is the strange thing…. no one is planning for the future of the country.

These quick deals just fill someones pocket in the short to medium term.

Makes sense to go solar as the cost of the technology is falling. Possibility to create more jobs than some specialised nuclear plant where skills will be imported.

ANC needs kickbacks URGENTLY. ANC is bankrupt, can’t pay staff or SARS. Donors have vanished. Please understand!

I am a fan of Outa and consider that they do a good job of trying to hold the government to account. However I believe that they are wrong in this instance because the reason the licenses were granted are obvious. Reason licenses were granted was that the country needs the power and Eskom cannot or will not supply it. Reason why the license was granted for 20 years is the sharp deterioration in the Eskom energy availability factor,also known as plant availability and plant utilization and there not being any means apparent for Eskom to improve this figure. If this carries on these ships will supply more electricity than Eskom in 10 years or so in reality once installed these ships will never leave.

For sure we need to secure energy supplies. What raises a red flag is that we seem to be locked into this company for 20 years.

As other less costly sources are developed that hopefully create jobs for South Africans we want an easy escape clause.

End of comments.



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