Regulator gives approval to powerships in South Africa

 ·22 Sep 2021

The National Energy Regulator of South Africa (NERSA) has approved three generation licences for floating powership provider Karpowership SA.

In a meeting on Tuesday afternoon (21 September), the energy regulator said that the generation licences have been approved for  Saldanha Bay, Coega and Richards Bay.

In the same meeting, Nersa approved generating licences for four other energy producers under its Risk Mitigation Independent Power Producer Procurement Programme (RMIPPPP) scheme.

South African lawmakers still plan to probe the country’s emergency power procurement program, the bulk of which was won by Turkey’s Karpowership.

A program and terms of reference will be drawn up by the Mineral Resources and Energy Portfolio Committee its chairman Zet Luzipo said on Tuesday.

Gwede Mantashe, the energy minister, will be the first to testify and DNG Energy, a losing bidder that has filed a lawsuit alleging corruption in the process, will also be invited to speak, he said.

The tender aims to provide South Afirca with about 2,000 megawatts of power by August next year and is yet to be finalized as the date for so-called financial close has been extended by two months until the end of September.

The appointment of Karpowership, which produces power from gas-fired plants mounted on ships, as a preferred bidder has been challenged by DNG and environmentalists.

Court case delay

The court case filed by DNG also threatens to delay the provision of the electricity by months as banks baulk at providing funding because of the risk of an adverse judgment, Bloomberg reported.

Officials at three of the seven preferred bidders selected to provide power by August 2022 said the lenders are refusing to sign off on the projects until the court case is complete. They asked not to be identified because the talks are confidential.

The case filed in South Africa’s High Court by DNG Energy, which alleges corruption by government officials, was earlier this month postponed until 30 November. The deadline for financial close of the projects proposed by the seven preferred bidders has been set at 30 September by the government, already a delay from an initial 31 July requirement.

The delays mean there will be little imminent relief from intermittent power cuts imposed by state utility Eskom. The outages have hindered the performance of the South African economy and damaged investor confidence since 2005.

In addition to Turkey’s Karpowership, which secured about 60% of the contracts to provide 2,000 megawatts of electricity, the winning groups include some of the world’s leading energy companies. TotalEnergies, Electricite de France, Scatec ASA and ACWA Power are all involved.

DNG has, in its court documents, demanded that it replace Karpowership as a preferred bidder and had earlier attempted to have all the other bidders interdicted from reaching financial close. It later dropped the second demand.

With further reporting by Bloomberg.

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